What is an offer made in response to another offer called?

An offer made in response to another offer is known as a counteroffer. When someone receives an initial offer and wishes to change the terms, they create a counteroffer. This new offer effectively rejects the original offer while proposing different terms for negotiation. The act of making a counteroffer puts the negotiation process in motion, allowing both parties the opportunity to agree on mutually acceptable terms.

The term "counteroffer" is particularly important in contractual discussions because it signifies that the original offer is no longer valid; the original offeror must now consider the counteroffer on its own merits. This concept is fundamental in contract law, as it helps define the expectations and obligations of the parties involved in the negotiation.