A counter offer is a response to an initial offer made in the context of contract negotiations. It is a new offer made by one party that rejects the original offer, but suggests different terms or conditions. A counter offer terminates the original offer, meaning that it can no longer be accepted, and the party making the counter offer is now in a position to accept or reject any subsequent offers made by the other party. For example, if an individual makes an offer to purchase a house for $500,000, and the seller responds with a counter offer of $550,000, the original offer of $500,000 is no longer valid and the buyer must either accept the new offer or make a new offer.