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

When an initial offer is responded to with a counteroffer, the initial offer becomes void. This is because a counteroffer constitutes a rejection of the original offer, as it presents different terms for consideration. In contract law, the act of making a counteroffer indicates that the offeree (the person receiving the offer) is not happy with the terms of the original offer and is proposing new terms instead.

Once a counteroffer is made, the original offer is no longer valid and cannot be accepted. The focus shifts to the counteroffer and whether the original offeror accepts the new terms proposed. This principle is essential in understanding how negotiations proceed, as it highlights the importance of clarity and mutual agreement in forming a legally binding contract.

The other options do not accurately reflect the nature of a counteroffer. The initial offer does not remain valid, and both the initial and counter offers cannot simultaneously hold validity, since a counteroffer inherently nullifies the original terms.