Acceptance must correspond with the offer in all material respects.
When parties are negotiating a contract, an offer made by one party lapses if it is rejected by the other party. If the offeree makes a counteroffer, that amounts to a rejection of the original offer.
A binding contract can only be brought about by an acceptance that corresponds with the offer in all material respects. The acceptance must be unconditional. An answer that is equivalent to “Yes, but” does not amount to an acceptance. At best it is a counteroffer and rejection. Once an offer is rejected it is dead and it cannot be accepted unless it is revived by the offering party. In addition, the offerror can withdraw the offer at any time before acceptance.
In this matter, two neighbours were in dispute over the height to which one of the neighbours would build and obstruct the view of the other neighbour. The obstructing neighbour made a settlement offer which was met with a response that alleged the offer did not reflect what had been agreed orally between the parties and later met by a counteroffer. These responses were ignored by the offerror who proceeded to build. It was held that no settlement came into being.
A contract requires consensus reached by offer and acceptance and until there is a clear offer and an unconditional acceptance, in writing if necessary, there will be no contract.