(1) A counter-offer is an offer made by an offeree to his
offeror relating to the same matter as the original offer and proposing a substituted bargain
differing from that proposed by the original offer.
(2) An offeree's power of acceptance is terminated by his making
of a counter-offer, unless the offeror has manifested a contrary intention or unless the
counter-offer manifests a contrary intention of the offeree.
a. Counter-offer as
rejection. It is often said that a counter-offer is a rejection, and it does have the same effect in terminating the offeree's power of
acceptance. But in other respects a counter-offer differs from a rejection. A counter-offer must be
capable of being accepted; it carries negotiations on rather than breaking them off. The termination
of the power of acceptance by a counter-offer merely carries out the usual understanding of
bargainers that one proposal is dropped when another is taken under consideration; if alternative
proposals are to be under consideration at the same time, warning is expected.
1. A offers B to sell him a parcel of land for $5,000, stating
that the offer will remain open for thirty days. B replies, "I will pay $4,800 for the parcel, "
and on A's declining that, B writes, within the thirty day period, "I accept your offer to sell for
$5,000." There is no contract unless A's offer was itself a contract [supported by consideration], or
unless A's reply to the counter- offer manifested an intention to renew his original offer.
b. Qualified acceptance,
inquiry or separate offer....A mere inquiry regarding the possibility of different terms, a request for a better offer, or a comment
upon the terms of the offer, is ordinarily not a counter-offer. Such responses to an offer may be too
tentative or indefinite to be offers of any kind; or they may deal with new matters rather than a
substitution for the original offer; or their language may manifest an intention to keep the original offer
2. A makes the same offer to B as that stated in Illustration 1,
and B replies, "Won't you take less?" A answers, "No." An acceptance thereafter by B within the
thirty-day period is effective. B's inquiry was not a counter-offer, and A's original offer stands.
c. Contrary statement of
offeror or offeree....An offeree may state that he is holding the offer under advisement, but that if the offeror desires to close a
bargain at once the offeree makes a specific counter-offer. Such an answer will not extend the time
that the original offer remains open, but will not cut that time short.
3. A makes the same offer to B as that stated in Illustration 1.
B replies, "I am keeping your offer under advisement, but if you wish to close the matter at
once I will give you $4,800." A does not reply, and within the thirty-day period B accepts the
original offer. B's acceptance is effective.