Understanding The Distinction Between Cross-Offers And Counter-Offers In Contract Law

Contract law is a fundamental aspect of commerce and everyday life, governing agreements and obligations between parties. Within this legal framework, two terms that often arise are “cross-offers” and “counter-offers.” While they might appear similar, they carry distinct meanings and implications that can significantly affect contract negotiations. It is also a proposition made by one party called the offeror, to another party called the offered, clearly and precisely indicating the terms under which the offeror is willing to enter into a contract with the offeree.

An offer may take many forms. It may, for example, be made by word of mouth, ordinary letters, telephone, telegram, telex, fax, email or by elaborate documents with numerous clauses and subclasses. Whenever an offer is made, the offeree must accept the offer either by conduct, words, or a document that has passed between them. Nonetheless, there are two major instances where acceptance can be said to be invalid. They include; counter-offers and cross-offers.

This invalid type of acceptance has been a problem for many contract law students to clearly differentiate because they are similar. However, in this article, i will be making a vivid distinction between a counter offer and a cross offer. Consequently, if you have been seeking to know the differences between counter-offers and cross-offers, you are in the right place.

Difference between cross-offers and counter-offers

A Counter-offer is a statement by the offeree which has the legal effect of rejecting the offer and of proposing a new offer to the previous offer of the initial offeror. This is seen in the case of Benue Cement Co v Sky Inception (Nig) Ltd.

In that case, the respondent wrote the appellant proposing to assist the appellant to discover all wrong and excess bank charges charged by banks with which the appellant had banking transactions and in return the respondent would be paid 50% commission of the sum recovered.

The court held that the letter written by the appellant in reply to the respondent was a counter offer because it proposed new terms, which totally makes it a different offer. Accordingly, there is no counter offer unless it creates a power of acceptance to the previous offeror.

On the other hand, cross-offers are similar or identical offers made by two or more persons, one to the other, in ignorance of each other’s offer.

Take for instance, if Mr. A write to Mr. B offering to sell his car for $100 and Mr. B, before receiving the letter, writes to Mr. A offering to buy the same car for $100, there is no contract. This is so because none of the parties was aware of the offer of the other party at the time of writing.

The most relevant case that explains cross-offers is the case of Tinn v Hoffman & Co [1873] 29 Lt 271. In this case, the defendant wrote to the plaintiff offering to sell him 800 tons of iron at 69s per ton. The plaintiff wrote to the defendant, on the same day offering to buy 800 tons of iron at 69s per ton. The latter’s crossed in the post and the court held that there was no contract.

From the above explanation of counter offers and cross-offers, it is obvious that they are not the same. In a counter-offer, the statement of the offeree has the effect of rejecting the offer and proposing a new offer to the previous offer. However, cross-offers are similar offers made by the offeror and offeree in ignorance of each other.

Hope you now know the differences between a cross offer and counter offer. By way of conclusion, it is pertinent to note that both cross-offers and counter-offers are invalid types of acceptance. In other words, where there is a counter or cross offer in a contract the court will hold that the contract is invalid.

For an elaborate explanation of the difference between cross-offers and counter-offers, I enjoin you watch the video below from pranvac classes. Trust me; this video will help a lot.