What is a contract proposal called if it modifies the terms of the original offer and is considered a rejection of that offer?

A proposal that alters the terms of an original offer and is regarded as a rejection of that offer is known as a counteroffer. This term highlights the legal principle that any changes made to the terms of the original proposal represent a new offer. A counteroffer signifies that the original offeree is not accepting the initial terms, but is instead putting forth their own terms for consideration.

This concept is essential in contract law, as it establishes the dynamics of negotiation between parties. When someone issues a counteroffer, they effectively initiate a new negotiation process. The original offeror can then decide to accept, reject, or further negotiate based on the new terms presented.

Understanding this distinction is critical for anyone involved in contract negotiations to prevent misunderstandings and ensure clarity in the terms agreed upon.