Contract formation: Can WhatsApp messages create a legally binding contract?

Key elements of a valid contract

For a contract to be created, the following key elements need to exist:

1. Offer and acceptance
2. Intention to create legal relations
3. Consideration
4. Certainty and completeness of terms

We consider each of these elements below.  When all are present, an agreement becomes a legally binding contract.  However, if even one element is missing, the contract may not be enforceable. 

Offer and acceptance

An offer is a specific proposal made by one party (the offeror) to another (the offeree), and it must be clear and definite.  Acceptance, on the other hand, is the unequivocal agreement to the terms of the offer, resulting in mutual assent to the same terms.

Acceptance must correspond exactly with the terms of the offer without any variations; otherwise, it may be considered a counteroffer rather than acceptance.  Moreover, if an offeror sets a specific method of acceptance, the offeree must use that method to accept the offer.  Any attempt to accept the offer in another way will generally amount to a counteroffer.

Acceptance is an objective assessment.  What matters is not the parties’ subjective intentions, but whether their words and conduct would be understood by a reasonable person as indicating agreement.

Example: A company offers to sell 100 units of a product at £10 per unit.  The buyer accepts the offer via email, agreeing to the terms. This exchange forms a clear agreement.

Intention to create legal relations

For a contract to be valid, there must be an intention to create legal relations.  In commercial agreements, there is usually a presumption of legal intent, meaning that the parties involved intend for the agreement to be legally binding.  This presumption can be rebutted if there is clear evidence to the contrary.

Example: Two businesses sign a contract for the supply of goods.  The commercial nature of the transaction presumes an intention to create legal relations, making the contract enforceable.

Consideration

Each party must provide something of value in exchange for the promise of the other, unless the contract is made by deed.  It can take the form of money, goods, services, or even a promise to do or not do something.  The consideration must be sufficient, but does not need to be adequate in the eyes of the law.  This means that the parties are free to decide what constitutes consideration, even if it is nominal, such as the sum of one pound.

Example: A service provider agrees to perform maintenance work in exchange for a monthly fee.  The service and the fee are the consideration provided by each party.

Certainty and completeness of terms

The terms of the contract must be sufficiently certain and complete.  If an agreement is too vague or incomplete, or if essential terms are left to be agreed upon in the future without a mechanism for resolution, it will not constitute a valid contract.

Example: A lease agreement specifies the rental amount, duration, and responsibilities of each party.  The clear and complete terms ensure the contract can be enforced.

The role of informal communications and emojis in contract formation

The courts have increasingly recognised that informal communications, including the use of emojis, can contribute to contract formation.

In Southeaster Maritime Ltd v Trafigura Maritime Logistics Pte Ltd, the court considered the role of WhatsApp messages in the context of contract negotiations between a shipowner and a potential charterer.  The evidence in the case principally comprised a bundle of written communications, including WhatsApp messages and emails, supported by witness statements from both sides.

The judgment noted that negotiating positions were conveyed not only through emails but also via WhatsApp, and examples of positions communicated by WhatsApp were later reflected in the parties’ emails as they attempted to reach an agreement on outstanding matters.  The message at issue was sent by WhatsApp, and the court rejected arguments that its “unofficial” nature undermined its legal effect, holding that such messages could be significant in determining whether a binding contract had been formed.

Ultimately, because the recap of negotiations (a summary of the terms and conditions for a shipping agreement) stated that the arrangement was subject to both parties’ review of previously agreed terms and to management approval by the charterer – establishing two conditions precedent – no binding contract arose, as those conditions were not satisfied.

Similarly, Jaevee Homes Ltd v Fincham (t/a Fincham Demolition) EWHC 942 (TCC), considered the formation of a construction contract and the validity of payment applications.

The court had to decide whether the contract between Jaevee and Mr Fincham was governed by Jaevee’s standard written sub-contract terms or by a more informal agreement consisting of exchanges via email and WhatsApp messages.  The court ultimately found that a binding contract had been formed through WhatsApp messages, which clearly evidenced agreement between the parties on the contract sum and payment terms.

The decision confirmed that even informal communications, such as WhatsApp messages, can be sufficient to form a legally binding contract if the necessary elements are present, such as the scope of work, price, and payment terms.  The case is a practical illustration of how modern forms of communication can be integral to contract formation and the importance of clear agreement on payment procedures.

Summary

For a contract to be formed, the key elements are: an offer, acceptance (which must correspond exactly with the terms of the offer), consideration (something of value exchanged), and certainty of terms (the agreement must not be lacking essential terms).  Digital communications, including messages and emojis, can satisfy the acceptance requirement.  Businesses and individuals should be cautious and deliberate in their online interactions, as even informal messages may carry legal weight.

Contact our Corporate & Commercial team if you need assistance with reviewing or drafting contracts.