First Right of Refusal Clause Examples: Understanding the Benefits and Types In legal and contractual matters, a "first right of refusal clause" is a provision that gives a specified party the opportunity to purchase a property or asset before the owner is allowed to sell it to another party. This clause helps protect the interests of the preferred party and ensures they have the first opportunity to acquire the asset. Here are some detailed examples of first right of refusal clauses, shedding light on their types: 1. Real Estate First Right of Refusal: In real estate, a property owner may include a first right of refusal clause in a lease agreement or when selling the property. This clause typically grants an existing tenant the right to purchase the property if the owner decides to sell it. It ensures the tenant has an exclusive chance to purchase the property at the same price and conditions offered by the potential buyer. 2. Partnership First Right of Refusal: This type of clause can be found in partnership agreements or contracts among business partners. It enables existing partners to buy out the shares of a departing partner before they offer them to an external party. The first right of refusal clause maintains the control and continuity of the partnership by preventing unwanted third-party involvement. 3. Entertainment Industry First Right of Refusal: In the entertainment industry, artists or content creators may negotiate a first right of refusal clause with production companies or distributors. This clause ensures that the artist has the first opportunity to release their work or project through a specific channel or platform. For example, a musician might have the first right to release their album exclusively on a particular music streaming platform. 4. Intellectual Property First Right of Refusal: Companies or organizations that license their intellectual property (IP) may incorporate a first right of refusal clause in their agreements. This grants the licensor the right to approve or reject any potential sublicensing or assignment deals offered to the licensee. With such a clause, the licensor can retain control over the distribution and usage of their IP. 5. Business Acquisition First Right of Refusal: In the business acquisition context, a first right of refusal clause can be utilized to allow existing shareholders or certain employees to purchase a company if a majority shareholder decides to sell their shares. It ensures that preferred parties have the opportunity to acquire the shares and maintain the current ownership structure. By implementing different types of first right of refusal clauses, parties can safeguard their rights in various industries and scenarios. These clauses enable designated individuals or entities to maintain control, seize advantageous opportunities, and ensure fairness in transactions. It is crucial to consult legal professionals to draft and interpret such clauses accurately, considering the specific requirements of each situation.
First Right Of Refusal Clause Example
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For example, a commercial tenant may prefer to lease a location; however, he may buy the premises if it meant that he would be evicted if the property sold to a new owner. In such a case, the tenant would negotiate to have a right of first refusal clause incorporated into his lease.
At the completion of the Term of this Agreement, Buyer agrees to grant to Seller the right of last refusal to match any bona fide written offer received by Buyer from another supplier to supply the volumes of gas hereunder upon the same terms as offered by such other supplier.
Right of first refusal clauses are sometimes included to provide the opportunity for the home or unit to stay under the control of related parties. This clause may be used to give a relative or family member the right to buy a property from someone before they put it on the market and seek outside offers.
They will have the right of first refusal if the landlord decides to sell, and compulsory acquisition powers will apply in certain circumstances. The right of first refusal recognises the interests of people living in flats in the sale of the ownership of their block.
The right of first refusal granted herein shall terminate (i)with respect to any particular First Refusal Space upon the failure by Tenant to exercise its right of first refusal with respect to the First Refusal Space so offered by Landlord pursuant to the terms of this Section1.