A counteroffer is a proposal that is made as a result of an undesirable Offer to Purchase. A counteroffer revises the initial offer and makes it more desirable for the person making the new offer. This type of offer permits a person to decline a previous offer and allows offer negotiations to continue.
An offer that provides new terms or conditions becomes a counteroffer. However, the offer may limit, change, or add some or all the terms of the original offer. There is no obligation of either party until they agree on a contract, which occurs once the counteroffer is accepted. Once the buyer or offeree accepts a counteroffer, a binding contract is formed, which is enforceable against the seller or offeror. A counteroffer is a reply to an original offer, which is greater or less than the original price. This type of offer voids a previous offer and the entity, which presented that offer, is no longer legally responsible for it.
A counteroffer is conditional. When the seller receives a low offer, the offeree can counter with a price, which he feels is reasonable. The buyer can either accept that offer or counter again. The seller can counter the offer; however, the offeree does not have to accept it.