A contract right, which gives its holder the option to make a deal with the owner of an asset, before anyone else can. The parties will also regulate in the contract the terms in case of transference, breach of the right etc. For example: Dina and Yossi are the owners of a company. Yossi wants to sell his shares for 100$, but Dina holds the right of first refusal to purchase the shares. Therefore, before Yossi can sell the shares to any third party, he must first offer it to Dina in 100$ and only if she will declined the offer, a third party may buy the shares. Another example is a call option on the shares- Dina has a call option on Yossi’s shares. Yossi’s will to sell the shares is the date of excision. Dina may realize the option and buy the shares or decline and then the shares will be available for sale to third parties.
What is the “Right of first refusal”
About the Author: Karin Maimon
Third year Law & Business (Accounting) student at the IDC Herzliya. Dreams of becoming an owner of a VC company that will connect between different markets around the world, focusing on innovation and technology.