I never send any rejection emails out when my directories are free for submission. With so many submissions pouring in and with the vast majority getting rejected, I don't want to get emails back from people explaining to me how their site ISN'T spam, affiliates, made-for-ads, porn, yada yada yada. With paid submissions, you'll rarely have to reject someone but it does happen and you should definitely contact the buyer and explain, in a nice way, why the site submitted can't be listed (and offer to list another of his/her sites instead).