A recent High Court judgment has ruled that a job agreed via WhatsApp between a property developer and a demolition contractor in 2023 formed a legally binding contract. Beyond Corporate’s Molly Hackett looks at why the informal WhatsApp conversation held up as a contract in Court.
Although agreed over the messenger platform in an informal manner, it was decided that the developer had owed the sums in line with the payment terms agreed via WhatsApp and previous emails, taking precedent over the subcontractor terms put forward by the developer 9 days after the messages, given that the WhatsApp terms “constituted a concluded contract”.
The developer maintained that the messages were pre-contractual negotiations only. However, the judge noted that at no point during the exchange was it made clear that the agreement for the works “depended upon agreement as to any other matter such as incorporation of the Claimant’s [developer] standard terms”.
While other (usually) important terms were not agreed in the WhatsApp messages (such as start date timescales for completion), these terms were not needed or essential for the formation of the contract.
A sobering lesson for the developer and worthy reminder to businesses that a contract can be agreed with relative ease under English law, and that extra caution should be taken around how businesses approach and conduct negotiations.
Key takeaways
- Businesses ought to have an established procedure for agreeing contracts which can be implemented across the company, including when to put forward any standard terms that are intended to apply to an arrangement, how variations can be agreed and staff training on the consequences of informal agreements (via the likes of WhatsApp and email).
- “SUBJECT TO CONTRACT”: If engaging in pre-contract negotiations and there is an intention that standard terms will apply, businesses should be expressly clear that this is the case to reserve its position.
- The inclusion of an ‘entire agreement’ clause in a contract is important to exclude any terms agreed during pre-contract negotiations (whether this is in writing or over a call).
- While not always essential and dependent on the circumstances, businesses should ideally take steps to ensure that applicable contracts are executed and signed to ensure both parties understand and accept the terms of a contract.
