What is the consequence of making a counteroffer?

When a party makes a counteroffer, it is essentially providing a new offer to the original offeror. This action signifies that the counteroffering party does not accept the terms of the original offer and instead proposes different terms. As a result, the legal effect of this is that the original offer is considered rejected.

Once the counteroffer is made, the original offer is effectively terminated and cannot be accepted unless it is revived by the original offeror. The counteroffer represents a complete shift in negotiation, indicating that the parties need to start discussions anew based on the revised terms presented in the counteroffer. Therefore, the original offer is no longer a viable option for acceptance, reinforcing the need for clarity in negotiation and contract formation.