A recent decision from the Technology and Construction Court in the case of Jaevee Homes Ltd v Steve Fincham (Trading as Fincham Demolition) [2023] EWHC 3014 (TCC) provides guidance on two critical aspects of construction contract disputes: the formation of contracts via informal communications, and the validity of lump sum payment applications.
Contract Formation via WhatsApp
An issue at the heart of the dispute was that as to whether a construction contract had come into existence between Jaevee Homes Ltd (“Jaevee“) and Mr Fincham. The claimant contended that no binding contract had been agreed. However, the Court disagreed, finding that the parties had in fact reached agreement through a series of WhatsApp messages exchanged in March 2022.
In a detailed review of the communications, the Court concluded that the WhatsApp exchanges revealed all the hallmarks of contractual consensus: offer, acceptance, consideration, and intention to create legal relations. The messages included discussions of scope, pricing, and timescales. Notably, the defendant set out his lump sum price for the work in one message, which was met with an unequivocal “Agreed” from Jaevee’s representative.
The judgment underscores the fact that construction professionals—and indeed any commercial parties in negotiations or discussions —must take care when using informal platforms like WhatsApp. The ease and informality of messaging apps do not preclude their content being legally binding. As Recorder Singer KC noted, the fact that the agreement was reached through a “conversational style” and lacked formal signatures did not detract from its enforceability.
Lump Sum Invoices Can Be Valid Payment Applications
The second, and most surprising, finding in the case relates to the defendant’s payment application. As is often the case in construction projects, Mr Fincham issued a lump sum invoice listing the works completed, but did not provide a breakdown of costs per item. Jaevee argued that this did not meet the requirements of a valid payment application under the contract or the Construction Act.
The Court rejected Jaevee’s argument. It held that the invoice, although not broken down into individual work items with separate pricing, clearly identified the work claimed for and the amount sought. The document sufficiently informed the paying party of the basis for the claim, and thus qualified as a valid payment application.
The Court reiterated the principle that a payment application need not be in a particular format, nor does it need to adopt detailed quantity surveyor-style breakdowns, provided it is sufficiently clear and unambiguous in describing the work and the amount claimed.
This part of the decision is particularly important for smaller contractors and subcontractors, who often rely on simpler invoicing formats; especially where works are agreed on a lump sum basis. They now have assurance that a lump sum claims will not necessarily be invalidated merely due to lack of itemisation, provided that they communicate the substance of the works and the amount claimed.
Summary
This case is a timely reminder of two key points. First, that legally binding agreements can and do arise through informal communications, including messaging apps like WhatsApp. Second, that lump sum invoices—if sufficiently clear—can constitute valid payment applications, even without detailed breakdowns.