Modern construction contracts: invoices, WhatsApp and the law

In a ruling which carries important lessons for businesses of all kinds, a recent High Court case confirmed that WhatsApp exchanges were enough to form a legally binding construction contract. Kayleigh Whitman, Partner and Head of Commercial Dispute Resolution, explains how businesses need to think twice before hitting send on even the simplest of text messages.

Businesses, and indeed individuals, often assume that unless a contract is written down and formally signed, it is not enforceable. But that’s not how contract law works in practice.

The High Court case Jaevee Homes Ltd v Fincham has provided an important wake-up call for businesses and, while it centred on a building dispute, it shows how every company needs to pay much more attention to how they and their staff communicate and what can be inferred by their conduct.

We’re not talking about something abstract or unique here. At Coodes we are seeing more and more disputes where there is no formal documentation in place. Instead, agreements are effectively being made by email, phone, or, as the case above highlights, even WhatsApp messages.

As an aside, we are also seeing a growing number of disputes caused by unsophisticated and wholly inappropriate contracts stitched together from the internet or generated by AI – but that’s a story for another day.

As with many things in life and business, informal verbal or SMS agreements seem fine until something goes wrong. Whatever you thought you were getting yourself into, or however much you thought you were not being tied into something, if a dispute does arise the courts will look at whether the essential legal ingredients are there – regardless of how the deal was done.

When is a contract a contract?

So, what exactly makes an agreement legally binding? Under English law, a contract can be formed as long as four elements are present:

• Offer – one party sets out the terms
• Acceptance – the other party agrees
• Consideration – something of value is exchanged (typically payment)
• Intention to create legal relations – both sides intend the deal to be binding

In Jaevee v Fincham, the case centred around demolition works carried out at a former nightclub. WhatsApp messages included enough detail to meet all four tests: what work was agreed and when it was to be carried out, the cost, and how payments would be made. That was sufficient to constitute a legally binding contract.

The court went on to look at the contractor’s invoices and whether they qualified as valid payment notices. Three of the four invoices were deemed valid, even though they were brief. The deciding factor was that they clearly described the work carried out and included the amounts claimed.

There were some sector specific circumstances in this case, relating to the legal standards required for payment notices to be considered valid under the Housing Grants and Regeneration Act 1996 and the Scheme for Construction Contracts. But even outside this sector, detailed and transparent invoicing is a smart business practice as it protects your position if things go wrong.

What businesses need to take from this

The case sends a clear message to businesses across all industries:

• Be careful what you agree in messages. Casual communications like texts, emails, WhatsApps can create binding contracts.
• Don’t rely on formality alone. A lack of a formal written agreement or signatures does not mean there is no contract in place.
• Get your invoices right. Even relatively brief invoices can be enforceable if they include the right detail.
• Where possible, formalise agreements in writing. Clear contracts mean both sides know exactly where they stand, they reduce risk and help prevent disputes.

The Coodes Commercial Dispute Resolution team provides expert support to businesses across Cornwall and the South West. If your business is involved in a dispute or if you want to tighten up how you handle contracts, construction or otherwise, and payments, our team can help.

Contact Kayleigh Whitman on 01579 324019 or email kayleigh.whitman@coodes.co.uk