WHATSAPP WITH YOUR CONTRACT?

The recent case of Jaevee Homes Ltd (Jaevee) v Fincham Demolition (Fincham) which took place this year considers whether informal discussions through messaging services such as WhatsApp and social media could constitute a binding contract. (Spoiler alert – it does). In this article, B P Collins’ dispute resolution team examines the case in more detail and how the judgment has huge repercussions for any business owner working with suppliers or clients.

Background to the case

Jaevee Homes Ltd contacted Fincham to request that they demolish a building. Through WhatsApp messages, Fincham provided a quote for the works and Jaevee responded confirming that Fincham had the job, their start date, and how the works will be paid. Jaevee then provided Fincham with a purchase order and their own standard form of sub-contract.

Fincham sent Jaevee their invoices in accordance with what was agreed via WhatsApp, but Jaevee argued that they did not need to pay these invoices because the discussion within WhatsApp was informal and not a binding contract. Therefore, Jaevee only paid to Fincham what they believed they owed through their subcontract and Fincham brought the matter to an adjudicator. It was then found that the WhatsApp exchange constituted a binding contract and that Jaevee owed Fincham the remainder of their invoices.

How can WhatsApp messages form a binding contract?

There are generally six key components to a binding contract:

1. An offer;

2. An acceptance of the offer;

3. Consideration (usually a payment of some sort);

4. An intention to create legal relations;

5. Capacity (usually means of legal age and sound mind); and

6. Legality (the contract’s purpose must be legal).

Does a contract need to be a formal written document signed by all parties?

In short, no.

In Jaevee v Fincham it was found that the WhatsApp discussions constituted a legally binding contract because it met the key requirements outlined previously.

In summary, Fincham offered to provide Jaevee the demolition services in exchange for an agreed fee. Jaevee accepted the offer (confirming he had the job). The agreed consideration was the fee for Jaevee’s services. The parties had capacity to enter into the contract and the stated purpose of the contact (demolition services) was not illegal.

Jaevee argued that the WhatsApp messages did not constitute a contract because the messages were an informal discussion. However, and given the commercial context here, there was a presumption that the parties intended to be bound. Furthermore, that presumption is supported by what the parties proceeded to do: Jaevee provided the purchase order and form of sub-contract, and Fincham proceeded with the works, which were commenced on the basis of the WhatsApp messages.

A cautionary tale

It’s important to be aware that contracts do not need to be in writing, and as long as the key requirements of a contract are met, it is likely to be a legally binding agreement. Contracts can be formed by an oral conversation, WhatsApp exchanges, emails, text messages or even Facebook messages. The chances of there being a binding contract are even higher when it relates to any business or commercial activity.

If you would like further information or advice on the preparation, interpretation or breach of contracts, please contact B P Collins’ dispute resolution lawyers on 01895 631942 www.bpcollins.co.uk