2009-11-20, 03:56 PM
Right of First Refusal is when a person has the ability to make the first offer before a seller can go anywhere else.
For example, consider Smith owns a house and Jones has first refusal rights on the house. In order for Smith to be able to sell his house to anyone that might want to buy, he must first ask Jones if he would like to buy it. If and only if Jones says "No, I don't want to buy it" can Smith attempt to sell the house to other potential buyers. Therefore, Jones will always be the first person to be asked if he'd like to buy the object he has First Refusal over.
If Smith sells the house to a person without asking Jones if he would like to purchase it first, Jones can file a breach of contract lawsuit and block the sale of the house.
For example, consider Smith owns a house and Jones has first refusal rights on the house. In order for Smith to be able to sell his house to anyone that might want to buy, he must first ask Jones if he would like to buy it. If and only if Jones says "No, I don't want to buy it" can Smith attempt to sell the house to other potential buyers. Therefore, Jones will always be the first person to be asked if he'd like to buy the object he has First Refusal over.
If Smith sells the house to a person without asking Jones if he would like to purchase it first, Jones can file a breach of contract lawsuit and block the sale of the house.