playing as the Yor, at war with the Altarians, went to make peace with them and the option was greyed out. hovering over it, a pop up indicated the option wasn’t available because they had embargoed me. a couple turns later they asked me for peace and i accepted. i went into the diplomacy screen and wanted to trade with them but the option was greyed out, saying they had embargoed me. if i couldn’t make peace or trade with them, how were they able to make peace with me if they had me embargoed?
also, whenever anyone asks me for peace that i’m at war with, there’s never any option to set the terms. it’s always a straight yes or no. i could swear in earlier versions there was a screen similar to the trade screen where you could pick what you wanted to give up or ask for as part of the peace treaty.
You cannot ask for peace through an embargo because it is done through a trade. They can still trade with you because they are the one embargoing you. It is the same way in real life, you know. You could decide whatever you want to let through the trade ban or not.
When the AI asks for peace, you will normally only get a Yes or No response. The only time you get [to make] a trade is when your faction power is significantly higher than theirs to where it is hopeless for them to win, so they have to beg for peace before you destroy them.