Contract Formation in the Age of WhatsApp: The ‘Thumbs-Up’ That Sealed the Deal

Contract Formation in the Age of WhatsApp: The ‘Thumbs-Up’ That Sealed the Deal

The gap between informal modern communication and the strict statutory payment regime of the Construction Act 1996 has been bridged by a High Court decision in Javee Homes Limited v Fincham (t/a Fincham Demolition). It shines a light on the expanding definition of a “written contract” in an age where it’s often second nature to off-the-cuff, on-the-go, and even without words at all. Understanding how far a WhatsApp reply can be taken may help you to avoid any awkward misunderstandings that have legal consequences.

WhatsApp Messages and a Contract Dispute Ruling

Let’s take a moment to layout the case background that lead to the High Court decision. Jaevee Homes Ltd, a contractor, negotiated the terms for a residential extension with Mr. Fincham. After a meeting, the key terms; a fixed price of £285,000, a defined scope of works, and a programme, were set out in a WhatsApp message from Jaevee’s director to Fincham.

The message concluded: "If you’re happy, we can start next Monday. Just confirm."

Mr. Fincham replied: "👍 Thanks, that’s great. Please proceed."

And so, work commenced.

Jaevee Homes submitted four payment applications for interim sums via email, as was its standard practice. No payment was made. Following a further WhatsApp reminder, Fincham rejected that any formal contract existed, arguing the agreement was too vague and, critically, that as there was no "construction contract" in writing.

Therefore, he believed that the statutory payment mechanisms and the right to adjudicate did not apply. In other words, he didn’t have to pay. Jaevee Homes promptly referred the payment dispute to adjudication. The adjudicator found in Jaevee’s favour, and the case reached the High Court on Fincham’s challenge.

What Constitutes a Written Contract Anyway?

The application of the Construction Act’s payment and adjudication provisions can only be triggered by a binding construction contract. You may feel clear on the understanding that a written agreement is required to initiate this. But as business communications have transformed from printed paper to email to being embedded in our digital messaging systems, what does a written contract really mean today?

The judgment provides critical guidance on two fronts:

1.      How a binding construction contract can be formed through informal digital correspondence.

2.      The pivotal consequence that such a formation triggers the application of the Construction Act’s payment and adjudication provisions.

From Thumbs-Up to Statutory Terms

Having reached the High Court, the judge in the case proceeded in two critical stages of analysis:

1. Contract Formation via WhatsApp

The court first had to determine if a binding contract existed at all. It found that the WhatsApp exchange contained all the essential elements of a contract:

·         Offer (the message setting out price, scope, and time)

·         Acceptance (the "thumbs-up" emoji and the words "please proceed")

·         Consideration (the promise to perform the works for the price)

The context was commercial, and the language was imperative ("proceed"), indicating an intention to create legal relations. The judge confirmed that the law of contract is concerned with substance, not form. As such, a chain of messages on an informal platform, such as WhatsApp, can unequivocally create a legally enforceable agreement.

2. Application of the Construction Act

Whether or not the Construction Act was triggered was the core of the legal dispute. Fincham’s counsel argued that for the Act’s payment provisions to apply, the contract must be "in writing" as defined by section 107, which requires that all terms are recorded in a written document, exchanged letters or, crucially for this case, are "agreed in writing."

The judge found that the WhatsApp exchange itself constituted a document "in which the agreement is evidenced" electronically. Furthermore, the entire agreement was "agreed in writing" through the exchange of written messages, albeit written on a messaging platform. After all, the WhatsApp thread recorded all the key terms; the parties, the scope of work, the price, and the nature of the work (a residential extension, clearly falling within the definition of "construction operations").

Therefore, the contract was not only valid but also constituted a "construction contract" to which the Act applied. This meant several statutory implications were triggered automatically, including:

• Implied Payment Terms: The Scheme for Construction Contracts governed the payment mechanism, providing for validity of Jaevee’s payment application. Should Fincham wish to withhold payment he would have to serve a timely pay-less notice.

• Right to Adjudicate: Jaevee Homes had a statutory right to refer any payment dispute arising under the contract to adjudication "at any time."

Implications for the Construction Industry

The High Court upheld the original adjudicator’s decision and enforced the payment award in favour of Jaevee Homes. So, what does this mean for the construction industry and your business?

Emojis = Commitment?

While this case and the consequences of messages exchanged by WhatsApp is not groundbreaking, it does solidify the principle that construction contracts can be formed swiftly and informally through digital media. That simple emoji you sent could be enough to bind you to a significant financial commitment, so take pause.

Informal Communication = Formal Obligations (subheading)

Secondly, and most importantly, it clarifies that such informal agreements are not a loophole to avoid the statutory payment regime. By finding that a WhatsApp thread satisfies the "agreed in writing" requirement of the Construction Act, the judgment ensures that the protections afforded to contractors, particularly the right to regular payments and swift adjudication, apply with full force to contracts formed in this modern manner.

• For clients and developers: this is stark warning that the informality of a communication platform does not diminish the formality of the legal obligations created.

• For contractors and subcontractors: it reinforces the critical importance of ensuring key agreement terms are captured in writing, even if that "writing" is just a text message, as it is the key to unlocking statutory rights.

How We Can Help

To make sure you don’t fall victim to the confusion of modern communication, at Shemmings Hathaway LLP we provide comprehensive legal support on all your construction contracts. Our team guides you through negotiations, tendering, drafting, and the entire construction phase, delivering clear, practical advice to resolve complex issues.

Wherever you are, we are there to protect your interests and achieve optimal results for your business. Our aim is to deliver service so good you may even feel like giving us a “thumbs up”.