What happens when both parties agree on different terms than what was originally proposed?

When both parties agree on different terms than what was originally proposed, it results in a counter-offer. This is a fundamental concept in contract law. A counter-offer indicates that the original offer has been rejected, and a new proposal is being made with different terms.

In this scenario, the acceptance of the new terms suggests that both parties are engaging in negotiations and are willing to adjust their initial positions. The counter-offer becomes the new basis for discussions and highlights the intention of both parties to reach a consensus that may ultimately lead to a binding agreement if accepted.

A mutual agreement and a new contract may eventually arise from this process, but those concepts come into play after a counter-offer is acknowledged and accepted by the original offeror. If the original offer were simply voided, there wouldn’t be a counter-offer—this implies a rejection of the original offer without proposing new terms. Thus, the emphasis on the counter-offer accurately reflects the dynamics of negotiation and agreement in contract formation.