Background

Jaevee Homes Limited ("Jaevee"), a property developer, engaged Fincham Demolition ("Fincham"), a demolition contractor, to carry out demolition works at the former Mercy Nightclub in Norwich.

The works were discussed by way of e-mails and WhatsApp messages between the parties in April and May 2023. Jaevee then sent a purchase order and a sub-contract on 26 May 2023, but this e-mail and its contents were never acknowledged by Fincham.

Fincham commenced the works on 30 May 2023, and ultimately issued four invoices to Jaevee on 9 June, 23 June, 14 July and 27 July, totalling £195,857.50 plus VAT. Those invoices went unpaid and Jaevee failed to issue any payless notices in respect of the same.

Fincham initiated an adjudication on 30 July 2024 to recover payment of the four invoices on the basis that no payless notices had been served. This was common ground and the main issue in the adjudication was whether the invoices were valid applications for payment. Fincham argued that the contract was formed by way of the WhatsApp messages exchanged, in which it was specified that Fincham would be paid 28 to 30 days after the issue of each of their invoices. However, Jaevee protested the frequency of these invoices, averring that the contract was formed by way of the documents they had sent on 26 May 2023, and that Fincham was only permitted to issue one application for payment per month.

On 11 September 2024, the Adjudicator found in favour of Fincham. Jaevee failed to comply with the Decision. The Decision was duly enforced following proceedings on 9 December 2024, in response to which Jaevee issued Part 8 proceedings seeking a declaration on the terms of the contract and the validity of Fincham's applications for payment.

Decision in the Part 8 Proceedings

1. The judge deemed the exchange of WhatsApp messages to have constituted a concluded contract between the parties because:

• The WhatsApp exchanges agreed the essential elements of a contract, including the price, scope of works and payment terms. Although the payment terms were not entirely agreed, it was considered sufficient enough that they confirmed a price and final date for payment, and it was highlighted that "the absence of payment terms is not antithetical to the existence of a concluded contract – an important target of the 1996 Act is to fill the gap if a contract does not contain appropriate payment terms."

• Agreement regarding the duration of the contract works and the precise start date (as averred by Jaevee to be missing) was not considered to be an essential contract term, but in any event, there was an implied term which obliged Fincham to complete the works within a reasonable period, and a date for the commencement of the first part of the works had also been expressly agreed via WhatsApp.

• The contract documents and terms sent by Jaevee to Fincham on 26 May 2023 were not incorporated as they were never accepted by Fincham, and had been sent after the contract had already been concluded via WhatsApp.

2. Regarding the validity of the applications for payment, the judge did accept that Fincham was "free to make one, but only one, application for payment each month". Therefore, only three of the four invoices were valid. However, because the WhatsApp messages made no provisions as to how the monthly instalments were to be calculated, the provisions in the Scheme for Construction Contracts ("the Scheme") would be implied.

Conclusion

This case serves as a stark reminder demonstrating the ease of which parties can enter into contractual relations. Negotiation of terms using informal methods of communication like Whatsapp or other forms instant messaging will not prevent a binding contract from coming into existence provided the essential elements of formation are present.

In the context of construction contracts, very few elements need be agreed to form a binding contract as "…the target of the 1996 act is to fill the gap…" and imply certain terms that the parties may have neglected to deal with, e.g. some of the necessary payment terms. This is something for parties to be mindful of, particularly as the Scheme provides for shorter periods than might otherwise have been agreed in formal negotiations.