This aspect has frustrated me in a LOT of games.  Even if the game in question allows the AI to sue for peace, most often the game design won't allow the AI to try to bribe the player to set aside hostilities.  It is, in fact, a matter of "You can declare peace now, or else we are prepared to fight to the last infant if need be."  Which is ridiculous.  There never was a war where EVERYONE on the losing side was willing to fight to their total extermination.  (Some cases of the victors not accepting surrenders though.)  Entire tribes, nations, and even empires have surrendered under terms that effectively meant ALL of the losers became slaves.  Anything except total extermination.

"most" of the time you can tel them to pound sand, wait a few turns, then you initiate the terms of their surrender.

But i agree , the AI should due better than a yes/no

My mistake.  So, yes, when they ask for peace, there is only the option for YES or NO.  

However, you can say no, and immediately offer peace, and receive some concessions.  The concessions will be quite small when you do this immediately.  Haha, I was only able to squeeze a few hundred credits out of the Yor.  However, I am certain that if you continue to pummel them, and offer peace later, your concessions will be higher.  If not, then the game is fouled.  Hell, during the concessions, you can even do a full trade session, which wont happen for atleast 10 turns after peace is brokered, due to the diplomatic cooldown.