Contracting by WhatsApp

Contracts form the basis of commerce. Without them, everything would come to a sudden halt. To make commerce work, the common law has always taken a pragmatic approach to “formalities”. Yes, certain types of contracts (e.g. for the sale / purchase of land) are quite important and need to be documented and signed etc. But for everything else the common law takes the view “so long as you’ve reached agreement on essential terms, and you intend to be bound, that’s it – you’ve got yourself a contract”! 
 
The absence of the need for formalities means that contracts can be entered into in all sorts of ways, and maybe without people realising that they’ve entered into a contract. A case decided recently vividly illustrates this https://d34xi2cisccwsg.cloudfront.net/resources/Judgments/Jaevee-Homes-v-Fincham.pdf. The court held that a series of WhatsApp messages between a property developer and a demolition contractor resulted in a contract being formed. 
 
The contract in question concerned demolition works on a particular site (the old “Mercy” nightclub in Norwich).  As the WhatsApp messages revealed, the parties had agreed on the contract price and the scope of works. There was no agreement on payment terms (details, details…), but this didn’t matter because UK statute law implies payment terms in the absence of the parties agreeing on them. 
 
The demolition work went ahead, and then the contractor sought to be paid. There was a dispute about this, which revolved on what the parties had (or had not) agreed. A huge amount of time and evidence was devoted to the question of whether the parties entered into a contract, and if so on what terms. The court held that the content of certain WhatsApp communications between the parties were enough to create a contract, and those terms (however skeletal) applied here. 
 
Of course, it’s wonderful we live in an age where electronic comms make everything easy for us. But this informality also comes with risks and can lead to enormous confusion, including as to whether parties have actually entered into a contract. Some lawyers (not me) will pontificate and say “get everything clear in writing, and then sign a contract”. That’s the best approach, but it doesn’t reflect what goes on in the real world.  Using magic words such as “subject to contract” can also really help to reduce transaction risks. In any event, I suspect this isn’t the last case about WhatsApp contracts that we’re going to see…   

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