What occurs when an offeree makes a counteroffer?

When an offeree makes a counteroffer, the original offer is effectively terminated and replaced by the terms of the counteroffer. In contract law, a counteroffer serves as a response that proposes different terms from those of the original offer, indicating that the offeree is not accepting the initial offer as it stands. This means that the original offer is no longer available for acceptance, and the party who made the original offer must now consider the counteroffer instead.

Counteroffers are significant in negotiations as they reflect the desire for modifications in terms, such as price, quantity, or conditions. By making a counteroffer, the offeree shifts the focus of the discussion to the new terms presented, thereby overriding the previous terms in the original offer.