By Funmilayo Olagunju
Contractual transaction is an integral part of human interaction. For a contract to become binding, there must be a valid acceptance of offer (among other things) by the person or party to whom it was made. A person or party making an offer is called the offeror while the person or party to whom an offer was made is called the offeree.
Black’s Law dictionary defines counteroffer as an offeree’s new offer that varies the terms of the original offer and that ordinarily rejects and terminates the original offer.
A counteroffer is a fresh offer which seek to modify the term(s) of previous offer. The effect of a counteroffer is that it cancels the previous offer making it unenforceable. The party making a counter offer becomes the offeror and the initial offeror becomes the offeree who is at liberty to either accept or reject the fresh offer.
For example, party A offers to sell 10 Bags of 50kg Rice to party B for the sum of Two hundred and Eighty thousand Naira, with advance payment that is exclusive of delivery charges.
Party B offers to buy the same product for the same amount from party A with payment by two installments exclusive of delivery charges.
Party B offers to buy the same product for same amount with advance payment INCLUSIVE of delivery charges…
Party B has made a counter offer which party A is at liberty to accept or reject.
In the event that party A rejects the counteroffer, party B can no longer enforce the initial offer made by party A. There must be an end to variation of negotiation to create a binding and enforceable agreement.
“…where there is a counter offer, it puts an instant end to a previous offer of the initial offeror. In other words, any addition to, or subtraction from the terms of the original offer is an alteration to the terms and amounts to a total rejection of the offer by the offeree. But the terms contained in the counter offer may form the basis for the formation of new contract.
WEMA BANK v. ABC/OMEGA INFORMATION TECHNOLOGY LTD
A good offer can be lost when a counteroffer is made and the offeree rejects it.
“An offer has to be accepted without further conditions, because any addition to or subtraction to the terms of an offer becomes a counter offer, and thus lead to a rejection of the offer”
See the case of IGWEBE v. SAIDASHS INTL. LTD & ANOR