What Is Counteroffer in Contract Law?

According to Law.com, the party who proposes a counteroffer seeks to revise the terms of a proposed contract without halting negotiations. Legally, a counteroffer is a rejection of the contract. When a counteroffer is given, several outcomes are possible. The options are for all parties to agree to the revised terms, for one side to submit another counteroffer, or for one side to reject the offer completely.

Investopedia notes that submitting a counteroffer allows one of the parties to reject a proposed contract while permitting negotiations to continue. Because the counteroffer voids the initial offer, the party that proposed the initial terms is no longer obligated to honor them if an agreement cannot be reached through continued negotiations.

According to Wikipedia, a counteroffer is defined as any alteration to a proposed contract contingent upon acceptance. This definition does not include requests for information or explanations of the terms, neither of which alter the agreement. It is also possible to amend the terms of a proposed contract without it being considered a counteroffer if the amendments do not materially alter the contract and are not a requirement for acceptance. To complete negotiations, the parties involved must accept the terms as-is without any additional conditions or alterations.