PSI Virginia Real Estate Practice Exam

What occurs when a counteroffer is made in a contract?

1. The original offer remains valid

2. The original offer is voided

3. The new offer must be accepted as is

4. The counteroffer can only be rejected

The correct answer is: The original offer is voided

When a counteroffer is made in a contract, the original offer is voided. A counteroffer is a response to an initial offer that includes new terms or conditions. This action signifies that the counterofferee does not accept the original offer as it stands and instead proposes an alternative. Since the counteroffer introduces modifications, it effectively cancels the original offer, meaning that the original terms are no longer on the table for acceptance. This concept is fundamental in contract law, as it emphasizes the importance of clear communication and agreement between parties when negotiating terms. Understanding the dynamics of offers and counteroffers is crucial in real estate transactions where negotiations are common, ensuring that all parties recognize when an offer is no longer valid.