The lease remains executory and bilateral, making B correct. It is executory because the twelve-month contractual performance has not yet been completed: three months remain during which the landlord and tenant continue to owe obligations. A contract becomes executed when the required performances have been completed.
The lease is bilateral because both parties exchange promises and continuing obligations. The landlord promises possession and performance of applicable lease obligations; the tenant promises rent and compliance with lease terms. The fact that the lease contains a purchase option does not convert the underlying lease into a unilateral contract.
An option itself has unilateral characteristics before exercise: in exchange for consideration, the optionor typically promises to keep the opportunity available while the optionee is not obligated to purchase. Once properly exercised, additional bilateral purchase obligations may arise. But the question specifically asks how to classify the ongoing lease.
The Massachusetts Board ' s Contract Law curriculum expressly requires knowledge of bilateral, unilateral, executed, and executory contracts, and its lease-option curriculum recognizes purchase options as clauses within leases.
Study Guide Reference: Contracts — classification of contracts; bilateral/unilateral and executed/executory; lease options.
