What does a counteroffer do to the original offer?

What does a counteroffer do to the original offer?

• A. It replaces the original offer with a new offer and extinguishes the original.
• B. It confirms acceptance of the original offer.
• C. It extends the settlement period.
• D. It has no legal effect.

Answer: (A)

A counteroffer serves as a rejection of the original offer and replaces it with a new offer bearing different terms, so the original offer is extinguished. Until the new terms are accepted, there is no contract. The original offer cannot be later accepted unless the counteroffer is withdrawn or the parties reach an arrangement on the new terms. This action does not confirm acceptance of the original terms, it does not automatically extend any settlement period, and it creates a new negotiation rather than leaving the prior offer in place.

A counteroffer serves as a rejection of the original offer and replaces it with a new offer bearing different terms, so the original offer is extinguished. Until the new terms are accepted, there is no contract. The original offer cannot be later accepted unless the counteroffer is withdrawn or the parties reach an arrangement on the new terms. This action does not confirm acceptance of the original terms, it does not automatically extend any settlement period, and it creates a new negotiation rather than leaving the prior offer in place.