What type of acceptance modifies or rejects the original offer in a contract?

The correct answer is a counteroffer. A counteroffer occurs when the offeree responds to an initial offer with a new proposal that alters the terms of the original offer. Essentially, this means that the initial offer is rejected, and the counteroffer replaces it with new terms that the original offeror must then accept or reject. This process underscores the negotiation aspect of contract law, where parties can engage in discussions to find mutually acceptable terms.

In contrast, an agreement usually refers to a mutual understanding between parties and does not inherently modify the terms of an existing offer. An addendum is typically an addition to an existing document or contract rather than a modification of the original offer itself. An amendment, on the other hand, implies a change made to a completed contract or agreement but does not stem from the act of proposing a new set of terms as seen in a counteroffer.