Counter-offer
Sometimes a reply from an offeree comes in the form of a new proposal, or
counter-offer. It may simply be that the offeree is not happy with one or
more of the terms and makes changes accordingly. Since this is not an
agreement to all the terms of the offer, it is not an acceptance (p. 20), and
is known as a counter-offer. It is really a new offer, which is then open to
acceptance or termination in some other way. The effect of a counter-offer
is to destroy the original offer. An example would be if Jack offers to sell a
bicycle to Jill for £70, and Jill says ‘I’ll give you £68 for it’; here, there
would be no contract, even though Jack and Jill may be quite close to
agreement. Further, if Jack did not want to accept £68, Jill could not
subsequently insist on being allowed to buy the bicycle for the original
price of £0, because her counter-offer cancelled Jack’s original offer. In the
following case this kind of bargaining situation arose over buying a farm.
14 Contract law
Figure 2.2
Hyde v Wrench(1840)
An offer was made to sell at £1000. The buyer refused this, but offered
to pay £950. When this was not accepted by the seller, the buyer then
tried to insist on buying at £1000, but the seller had decided not to sell
him. It was held that he was not obliged to do so, since in making a
counter-offer of £950 the buyer had at the same time refused the
original offer, thereby terminating it.