What is a "counteroffer"?

A counteroffer occurs when a party responds to an initial offer by changing the terms of that offer. In doing so, the counteroffer effectively rejects the original offer because it introduces new terms that the original offeror did not propose. This is a fundamental concept in contract law, as it shows that negotiation is taking place rather than simply accepting the initial terms set forth by the offeror. Since the original offer is rejected upon the creation of a counteroffer, it is essential for both parties to understand that a new discussion begins based on the modified terms.

The other options do not accurately describe a counteroffer. A new offer made after an original has been accepted indicates that an acceptance was already established, which does not pertain to counteroffers. The notion of an agreement remaining open for negotiation describes a situation where discussions are ongoing without a formal offer being rejected. Finally, a notification of acceptance without changes refers to straightforward acceptance of the offer as it was originally presented, which does not involve any modification or negotiation. Thus, the definition of a counteroffer as a modification of an existing offer that leads to rejection is key to understanding this legal concept.