What is a Counterclaim? [court - legal terminology]

A counterclaim arises when a defendant makes a claim against the plaintiff that initiated the lawsuit. As such, after the plaintiff has commenced court proceedings by filing and serving a complaint or statement of claim, the defendant must respond by way of an answer or statement of defense, but might also assert a claim against the plaintiff, which is identified as a counterclaim. Typically, a counterclaim is about the same issue as the original claim and is filed with the answer or statement of defense to the originating complaint / statement of claim.
By way of example, let’s say we have two people with a contractual dispute. The individuals are unable to resolve the matter between themselves, such that one of the people decides to commence a lawsuit and files a statement of claim with the court for breach of contract. The initiating party, is known as the plaintiff, and the person upon whom they serve the statement of claim and are suing is known as the defendant. Now, beyond filing their statement of defense, the defendant may believe that the plaintiff was first to breach the contract, such that the defendant also brings a counterclaim against the plaintiff for breaching the contract. The plaintiff's claim and the defendant's counterclaim will proceed and be decided in the same case.
The advantage of a counterclaim is that if it has merit it has the potential to reduce the damages that a defendant owes the plaintiff, or offset what they may owe the plaintiff due to funds from another party. It may even result in the defendant receiving more money than the plaintiff receives. From the perspective of the judicial system, counterclaims avoid the creation of multiple lawsuits, especially where the underlying facts and the general dispute has significant overlap. This has the added benefit of saving both parties time and money by focusing their interests on a single court proceeding.
Any defendant in the originating claim can make a counterclaim. That means there might be more than one counterclaim. A counterclaim can also be made against one or more plaintiffs from the original claim.
Meanwhile, if a defendant were to bring a claim against another defendant, this would be a cross-claim. And if a claim is brought against a party that is not yet a party to the court action, such a claim would be a third-party claim.
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