Friday, 4 February 2022

Counter Proposals

                            Counter Proposals

A counter offer or proposal is a rejection of the original offer. A counter offer means the original offer was rejected and replaced with another one. The counter offer gives the original offeror three options: accept the counteroffer, reject it, or make another offer. Counteroffers are prevalent in many types of business negotiations, transactions, private and public deals between two individuals or two entities. You may find them in real estate deals, employment negotiations, car sales, private placements, mergers acquisitions, takeovers, etc.

Any departure from the terms of the offer or any qualification vitiates the acceptance unless it is agreed to by the person from whom the offer comes. In other words, an acceptance with a variation is no acceptance; it is simply a counter- proposal, which must be accepted by the original promisor before a contract is made.

 The facts of the case in which this statement occurs were as follows: 

Before accepting an offer the plaintiff introduced certain terms like ‘Free Bombay Harbour and interest’, which were not there in the original offer. This, the defendant refused to accept. Subsequently, the plaintiff communicated his acceptance of the original offer, but the defendant did communicate his acceptance of the original offer, but the defendant did not assent to this. Plaintiff’s action for breach of contract was dismissed.

Sir Jenkins CJ said : “Unless there is an absolute and unqualified acceptance, the stage of negotiations has not yet passed, and no legal obligation is imposed.” The plaintiff’s first acceptance with new terms was in fact a counter offer which implied the rejection of the original offer. A counter offer puts an end to the original offer and it cannot be received by subsequent acceptance. 

In another case : A offered by a letter to sell certain claims to B at a specified rate. B in turn offered to buy a little less rate which A did not accept, but he did not withdraw his original offer. Then B accepted the rate as originally offered. This also A did not accept and B sued him for breach of contract. It was held that B by his counter offer to buy at reduced rate impliedly rejected A’s original offer and there was no contract. 

In a case, an offer to sell a farm for $ 1000 was rejected by the plaintiff, who offered $ 950 for it. This was turned down by the offeror and then the plaintiff agreed to pay $ 1000. Holding that the defendant was not bound by any such acceptance, the court said : “The defendant offered to sell it for $ 1000, and if that had been unconditionally accepted, there would undoubtedly have been a perfect binding contract, instead of that, the plaintiff made an offer of his own, to purchase the property for $ 950 and thereby rejected the offer previously made by the defendant. It was not afterwards competent for him to receive the proposal of the defendant, by rendering an acceptance of it. Therefore, there exists no obligation of any sort between the parties. ”

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