Usually in construction contracts, there are detailed signed agreements that outline the rights, obligations, and expectations of parties involved in a construction projects, for example ‘JCT’ contracts or using contracts approved by the RIBA.
The case of Jaevee Homes highlights that informal communications such as on WhatsApp have unintended contractual effects.
Details of the dispute
The parties involved were Jaevee Homes Ltd, a property development company, and Mr Steve Fincham (trading as Fincham Demolition), a demolition contractor. The dispute concerned demolition works by Fincham at a nightclub site being developed by Jaevee.
At the outset both parties discussed the scope of the demolition works via email with written quotations for the work and then discussion began on terms using WhatsApp.
Mr James of Jaevee confirmed via WhatsApp that Mr Fincham had been awarded the contract. The abridged version of conversation went as follows:
“[17/05/2023, 17:43:15] Steve Fincham: Ben Are we saying it’s my job mate so I can start getting organised mate
[17/05/2023, 20:06:42] Ben James: Yes”
Mr Fincham also said that “men will start the following Monday“. And monthly payments terms were also agreed.
On 26 May 2023, Mr James then emailed a formal contract to Mr Fincham and work began. Fincham submitted several invoices over a two-month period, which were paid in part by Jaevee. Fincham’s four invoices totalled nearly £200,000 and Jaevee paid £80,000. A dispute arose over the amount of work undertaken by Fincham and the remaining sums due under the invoices.
Jaevee said that the exchange of messages did not cover the essential terms of a construction contract, and the messages were not a valid agreement. By commencing the works after the issuing of Jaevee’s standard terms, Mr Fincham had accepted those terms by his conduct.
The court held that a contract was formed by the exchange of WhatsApp messages and not based on the formal contract sent later. Although the messages did not set out the period of the works or the start date or all the payment details, the court said that these were not essential terms, and the court held that there was a valid and binding contract.
Practical steps
The case is a cautionary tale about the use of informal communication channels when negotiating agreements. Whilst messaging platforms facilitate a quick and easy discussions, the case shows that using them for negotiations can be fraught with danger. Be mindful of informal messages, and verbal statements. If you wish to discuss terms for work, then make it clear that the exchanges are ‘subject to contract’ and agree a formal written contract.
