What is a counteroffer?

• A. Acceptance
• B. Counteroffer
• C. Consideration
• D. Disclosure

Answer: (B)

A counteroffer is a response to an offer that changes the terms. It effectively rejects the original proposal and creates a new offer with the modified terms. Because it introduces new terms, the original offer can no longer be accepted as-is; the offeror now has the option to accept, reject, or propose further changes to the new terms.

For example, if someone offers to sell a bike for $200 and the buyer replies, “I’ll buy it for $150 and you pay shipping,” that reply is a counteroffer. The seller can accept the $150 terms, reject them, or propose different terms. If the counteroffer is accepted, a contract forms. If not, there’s no contract based on the original offer.

This is different from acceptance, which would mean agreeing exactly to the original terms and forming a contract. Consideration is about the value exchanged to support a contract, not about how a counteroffer functions. Disclosure is simply sharing information and isn’t the action that creates or modifies an offer.