What is the effect of an unequivocal rejection on an option contract?

An unequivocal rejection of an offer within the context of an option contract does not terminate the option contract itself. An option contract grants the holder the exclusive right to accept or reject the offer during a specified period. If the offeree unequivocally rejects the underlying offer, it does not affect the validity of the option contract, which remains in force until the expiration date or until the holder decides to exercise it or let it lapse.

The rationale behind this is that the option itself is a separate contract that allows the holder to control the right to accept the offer. The rejection of the offer merely reflects a decision not to accept it; it does not negate the rights granted by the option.

While other options may imply consequences that alter the status of the option contract—such as suggesting termination or conversion into a unilateral contract—those implications do not align with the nature of an option, wherein the right remains intact until the defined conditions of the option contract are met. Thus, an unequivocal rejection does not diminish the holder's rights under the option agreement.