Cross Offer and Counter Offer
Cross Offer and Counter Offer
1. Cross Offer
Meaning:
A Cross Offer occurs when two parties make identical offers to each other simultaneously without knowledge of the other’s offer. However, neither party is aware of the other’s offer at the time of making their own offer. Because of this, there is no acceptance of an offer in the legal sense, and therefore no contract is formed immediately.
Characteristics:
Two offers are made by both parties.
Offers are identical in terms but are made independently and at the same time.
There is no acceptance of any offer.
No binding contract is formed due to lack of mutual assent.
Later, one party must accept the other’s offer to form a contract.
Example:
A offers to sell goods to B on certain terms.
B simultaneously offers to buy goods from A on the exact same terms.
Since neither knows of the other’s offer at the time of making their own, this is a cross offer.
Case Law:
Routledge v. Grant (1828)
In this case, an offer was made and then withdrawn before acceptance.
It was established that there must be a valid acceptance of an offer to create a contract.
Though not directly about cross offers, the principle supports that an offer without acceptance is incomplete.
Madan Mohan Malaviya v. Union of India (AIR 1954 All 271)
Cross offers do not amount to acceptance.
No contract arises from mere cross offers.
2. Counter Offer
Meaning:
A Counter Offer is an offer made in response to an original offer, but with different or additional terms. It rejects the original offer and proposes a new offer, which the original offeror can either accept or reject.
Characteristics:
Made after receiving an offer.
Varies the terms of the original offer (price, quantity, time, etc.).
It acts as a rejection of the original offer.
No contract arises until the counter offer is accepted.
The original offeror becomes the offeree in relation to the counter offer.
Legal Principle:
A counter offer destroys the original offer.
Once a counter offer is made, the original offer cannot be accepted unless revived.
Case Law:
Hyde v. Wrench (1840) 3 Beav 334
The defendant offered to sell a farm for £1000.
The plaintiff responded with a counter offer of £950.
The defendant rejected this and the plaintiff tried to accept the original £1000 offer.
The court held that the counter offer nullified the original offer, so no contract existed.
Powell v. Lee (1908)
An offer can only be accepted by the person to whom it is made.
Acceptance of a counter offer must be communicated clearly.
3. Difference Between Cross Offer and Counter Offer
| Aspect | Cross Offer | Counter Offer |
|---|---|---|
| Definition | Two identical offers made simultaneously without knowledge of the other | An offer made in response to an original offer with altered terms |
| Effect on Original Offer | Both offers stand independently; no acceptance occurs | Original offer is rejected and replaced by the counter offer |
| Contract Formation | No contract arises until one offer is accepted | No contract until counter offer is accepted |
| Mutual Assent | Absent, as no acceptance happens | Absent until counter offer accepted |
| Legal Impact | Both offers remain open unless withdrawn | Original offer is terminated by counter offer |
4. Summary
| Concept | Meaning | Result |
|---|---|---|
| Cross Offer | Simultaneous identical offers by both parties without knowledge of the other | No contract until one offer is accepted |
| Counter Offer | A new offer differing from the original, rejecting the original offer | Original offer is rejected; contract only after acceptance of counter offer |
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