A more thorough explanation:

A counter offer is a response to an initial offer made during negotiations for a final contract. It is an offer made by the other party that changes some of the terms of the original offer. When a counter offer is made, it automatically rejects the previous offer, and a new offer is created. The new offer must be accepted under the terms of the counter offer, or there is no contract.

For example, if Susan Seller offers to sell her house for $150,000 to be paid in 60 days, and Bruce Buyer responds with a counter offer of $140,000 payable in 45 days, the original offer is no longer valid. Seller can choose to accept the new offer, make another counter offer, reject the counter offer, or let it expire.

Another example could be during a job negotiation. If an employer offers a salary of $50,000 per year, and the employee counters with a request for $60,000 per year, the employer can choose to accept the new offer, make another counter offer, reject the counter offer, or let it expire.

These examples illustrate how a counter offer can change the terms of an initial offer and create a new offer that must be accepted under the terms of the counter offer.