What happens when an initial offer is answered with a counteroffer?

When an initial offer is answered with a counteroffer, the initial offer effectively becomes void. This is a fundamental principle in contract law known as the "mirror image rule," which states that an acceptance must exactly match the terms of the offer. A counteroffer introduces new terms or conditions, thereby rejecting the original offer.

As a result, the initial offer no longer exists and cannot be accepted unless the original offeror revives it. This means that both parties must either agree on the terms of the counteroffer or negotiate further, as the original terms are no longer on the table for acceptance. Understanding this concept is crucial as it highlights the importance of clear communication and agreement in forming binding contracts.