Which term refers to an offer that rejects the original and proposes new terms?

• A. Rejection
• B. Acceptance
• C. Renunciation
• D. Counteroffer

Answer: (D)

When an offeree responds to an offer by changing the terms, effectively rejecting the original and proposing a new bargain, you have a counteroffer. The original offer ends the moment the counteroffer is made, and the other party now has the option to accept, reject, or ignore the new terms. If the counteroffer is later accepted, a contract is formed on the new terms. This differs from a simple rejection, which ends negotiations without proposing new terms, and from acceptance, which would be agreeing to the original terms. Renunciation isn’t the correct label for this situation.