Legal Definitions - counteroffer

A counteroffer occurs when someone responds to an initial proposal by rejecting its original terms and simultaneously proposing new, different terms. Essentially, it acts as both a refusal of the first offer and the creation of a brand new offer in its place. Once a counteroffer is made, the original offer is no longer valid and cannot be accepted by the party who made the counteroffer.

It's important to distinguish a counteroffer from a mere inquiry or a conditional acceptance. A simple question about terms (e.g., "Would you consider a different delivery date?") is usually not a counteroffer. A conditional acceptance ("I accept, *provided that* you also include X") might be treated differently depending on the specific terms and jurisdiction.

Here are some examples to illustrate how a counteroffer works:

• Real Estate Negotiation: Imagine Sarah wants to buy a house listed by John for $500,000. Sarah makes an offer of $480,000. John responds, "I can't accept $480,000, but I will sell it to you for $495,000."

  Explanation: John's response is a counteroffer. He has rejected Sarah's original offer of $480,000 and proposed a new price of $495,000. Sarah's initial offer of $480,000 is now void, and she cannot simply accept it later if she changes her mind. She must now decide whether to accept John's new offer, make her own counteroffer, or walk away.

• Employment Contract: A tech company offers Emily a software engineer position with an annual salary of $120,000 and 10 days of paid vacation. Emily replies, "I appreciate the offer, but I would need a salary of $135,000 and 15 days of paid vacation to accept."

  Explanation: Emily's reply is a counteroffer. She has rejected the company's initial terms regarding salary and vacation time. By proposing new, materially different terms, she has created a new offer for the company to consider. The company's original offer of $120,000 and 10 days vacation is no longer available for Emily to accept.

• Business Supply Agreement: "Fresh Produce Distributors" offers to supply "Green Grocer Market" with 100 crates of organic apples per week at $25 per crate, delivered every Tuesday. Green Grocer Market responds, "We are interested, but we need 120 crates per week at $23 per crate, with delivery on Thursdays."

  Explanation: Green Grocer Market's response constitutes a counteroffer. They have rejected Fresh Produce Distributors' original terms (quantity, price, and delivery day). By proposing new terms for these key elements, Green Grocer Market has made a new offer. Fresh Produce Distributors' original offer of 100 crates at $25/crate on Tuesdays is now terminated.