counteroffers

A counteroffer is a response to an initial offer that changes one or more terms of the deal. In most contract settings, a counteroffer operates as a rejection of the original offer and creates a new offer for the other party to accept, reject, or negotiate further.

In contract law, a counteroffer generally extinguishes the original offer. Acceptance of the counteroffer by the other party forms a binding contract on the terms of the counteroffer. If the counteroffer is not accepted, negotiations may continue, but the original offer cannot be accepted unless it is revived or reintroduced by the original offeror. Some jurisdictions recognize exceptions, such as option contracts that preserve the original terms for a limited time.

Counteroffers arise in many contexts, including employment, real estate, and general business negotiations. In employment negotiations, a counteroffer might involve higher salary, different start dates, or altered benefits, and can come from either the employee or the employer. In real estate, buyers may submit counteroffers to adjust price, contingencies, or closing conditions, with sellers responding in kind.

Practical considerations include the timing of responses, the risk of losing leverage, and the potential for hardening positions. Because a counteroffer usually terminates the original offer, parties should understand that delaying or miscommunicating terms can cause negotiations to stall. Written documentation is common to clarify terms and prevent misunderstandings, though oral counteroffers can be legally binding in many jurisdictions if supported by consideration.

Examples illustrate the mechanism: an offer of $100,000 for a house is met with a counteroffer of $110,000 plus different contingencies; the seller may accept, reject, or propose another counteroffer, continuing the negotiation.