What happens to the original offer when a counteroffer is made?

When a counteroffer is made, it serves as a response to the original offer that alters some terms of that offer. This action signifies a rejection of the original terms and introduces new terms for negotiation. Consequently, the original offer is no longer valid as it has been effectively rejected by the counteroffer.

This principle is rooted in contract law, where an acceptance must mirror the terms of the original offer to create a binding agreement. Once a counteroffer is presented, the original offeror must decide whether to accept, reject, or possibly negotiate based on the new terms. Therefore, the correct answer identifies that the original offer is rejected and no longer valid, highlighting the implications that a counteroffer carries in the negotiation process.