Settlement and Alternative Dispute Resolution
Settlement Fundamentals
A counteroffer proposes terms differing from those offered, which under contract principles operates as a rejection of the original offer and terminates the offeree's power to accept it.
The original offer cannot be accepted afterward absent renewal.
Alternative Names:
Counter-Demand, Counterproposal
Why it Matters?
The rejection effect matters where a time-limited demand is involved, since responding with a counteroffer extinguishes the ability to accept the original terms and can eliminate the protection accepting would have provided against an excess judgment. Requesting an extension or clarification rather than countering preserves the option. Carriers evaluating policy limits demands should understand that a counteroffer forecloses acceptance.
Frequently Confused with
Related terms
Frequently asked questions
Does a counteroffer reject the original offer?
Why does this matter for policy limits demands?
