The High Court has recently considered whether an exchange of
WhatsApp messages can create a contract.
Jaevee Homes v Fincham [2025] EWHC 942
(TCC) arose from a dispute between a property
developer, Jaevee Homes Limited (“the developer”), and
demolition contractor Mr Steve Fincham (“Steve”)
regarding the terms of a construction contract.
The parties had agreed that Steve would carry out demolition
work, but they disagreed over the terms of their agreement. They
had started negotiating via email and then moved to WhatsApp
messages. Steve argued that a sub-contract with the developer was
formed by this exchange of WhatsApp messages. The developer
countered that a sub-contract had been agreed based on its standard
terms of business, having sent Steve these standard terms after the
WhatsApp exchange but before Steve started work.
Steve started the demolition work on 30 May 2023 and completed
it by July. The developer failed to pay any of his four invoices in
full. Following a disagreement over the amount of work Steve had
completed, the developer purported to terminate the sub-contract
that was (supposedly) based on its standard terms of business. The
developer also argued that the four invoices Steve had submitted
– on 9 June, 23 June, 14 July and 27 July 2023, totalling
almost £200,000 + VAT – did not comply with its
standard terms of business and were therefore invalid.
After a complex background of legal proceedings, the dispute
ended up for consideration before Judge Roger ter Haar in the High
Court.
How was a contract formed?
Judge ter Haar found that the parties had agreed a contract by
the following exchange of WhatsApp messages:
The judge said that this exchange, “whilst informal,
evidenced and constituted a concluded contract”. There was by
this point clear agreement on the identities of the parties, on the
scope of the works that Steve was to perform and on the price.
These being sufficient to bring a contract into existence, the
developer’s reply “Yes” brought a contract into
existence.
The judge went on to find that the parties had also agreed
payment terms (monthly payment applications using invoices) but
that this was not essential to create a contract. And, if the
parties had not considered the payment terms, legislation would in
any event have implied payment terms into the sub-contract, it
being a construction contract (on which, see below).
The developer had argued that there was no agreement on the
duration of the works. The judge commented that this was not
essential to form a contract, noting that the law implies a term
that the contractor will complete their work within a reasonable
time.
The developer had also complained that no start date had been
agreed. The judge said that a precise start date was not “an
essential term of the contract”. It was therefore not needed
to create a binding sub-contract.
Peculiarities of construction contracts
In isolation, this case may not seem especially noteworthy. It
is well established that contracts can be concluded without much
formality. Provided the usual tests are met (clearly identified
parties, agreement on what is to be done, consideration such as a
promise to pay a price, an intention to create legal relations and
sufficiently certain material terms), there is no legal principle
against concluding a contract through WhatsApp messages.
However, this case is particularly interesting for businesses
involved in the construction sector. It highlights the significance
of the Housing Grants, Construction and Regeneration Act 1996
(“the Construction Act”). Just as the Consumer Rights Act
2015 implies terms into consumer contracts – such as that
goods sold must be of satisfactory quality and as described –
that are not necessarily in the parties’ minds when concluding
a consumer contract, so the Construction Act implies important
terms into construction contracts. Many terms.
Part II of the Construction Act defines what a
“construction contract” is. This is broader than you
might expect. It encompasses, not just stereotypical building work,
but also professional services (such as landscape design) and a
plethora of other activities, such as painting or the fitting of
air conditioning – except contracts with residential
occupiers.
Until 2011, “construction contracts” had to be in
writing. That is no longer the case. Now, even oral construction
contracts, such as Steve’s sub-contract, are captured by the
Construction Act.
The Construction Act implies a unique right to refer disputes to
an adjudicator. This is the right that Steve used to bring a
– successful – adjudication against the developer to
enforce his four payment applications, which the developer then
sought to challenge in the High Court, including before Judge ter
Haar.
Adjudication, which applies only to construction contracts (and
to other forms of contract where parties have expressly opted in),
is a rapid and (compared to litigation in the courts) low-cost
method of resolving disputes. Each party must pay its own costs and
the process is widely regarded as effective. Very rarely do courts
allow appeals from adjudicators’ decisions. Instead of a judge
deciding the dispute by following the courts’ usual slow
timescales, an independent adjudicator reaches a decision within
weeks of a dispute being referred to them. Adjudicators are often
construction professionals such as quantity surveyors, rather than
lawyers.
If a construction contract does not contain written provisions
regulating the adjudication process – such as oral contracts
and Steve’s WhatsApp contract – rules are implied by the
Scheme for Construction Contracts (England and Wales) Regulations
1998 (“the Scheme”). Additionally, the Construction Act
tightly regulates payments in construction contracts. Where parties
do not expressly agree payment terms, comprehensive terms are
implied by the Scheme.
In Steve’s case, the developer had sought to argue that no
contract could have been formed by the exchange of WhatsApp
messages because of an (alleged) absence of terms regulating the
payment process, and that instead its standard terms of business
applied. Because Steve had not complied with the stringent payment
provisions of those standard terms, this argument would have
allowed the developer to set aside the payment applications that
Steve had enforced via adjudication.
The judge dismissed the developer’s arguments, noting that
comprehensive payment terms are implied by the Scheme and that
Steve, in making payment applications by issuing his invoices, had
complied with those implied terms. Therefore, three of Steve’s
four payment applications were valid. (The fourth was invalid
because Steve had made two applications that month, and the judge
found that the parties had agreed in their WhatsApp messages that a
maximum of one payment application would be made in any monthly
payment cycle. Notwithstanding this, Steve was the successful party
overall, having succeeded on every other point.)
What does this case mean for you?
This case provides a timely reminder of the ease with which
contracts can be created. In the construction sector and other
areas with complex legislation, such as the processing of personal
data, these can automatically be subject to a wide range of
unfamiliar terms and processes.
As a business, it is important to make sure that you know when
you have formed a contract. To avoid creating contracts
unexpectedly:
- ensure that, wherever possible, your staff use work emails and
not social media channels - make sure all communications – both written and oral
– are stated to be “subject to contract” - require your staff to document business arrangements properly
and refer all new relationships through your business’ legal
team - where you intend to conclude a contract, ensure that you
formalise its terms and conditions in writing, and include an
“entire agreement” clause that prevents pre-contract
negotiations and communications from influencing the contract’s
terms - if your business operates in sectors such as IT or construction
where it is common practice to start some work before the final
contract has been fully agreed, use letters of intent or similar
such arrangements to formalise the terms that apply to those
initial services before the final contract is agreed and
signed.
If in doubt – and particularly if a new contract might be
a construction contract and you are unfamiliar with the
Construction Act’s requirements – seek legal advice. At
Lewis Silkin, we have experts in construction law, data law and a
plethora of other areas. They are ready to help your business
comply with the law’s requirements and avoid costly
mistakes.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.