Editing Right of first refusal (section)

{{Short description|Contractual right to option to enter business transaction}}
{{About|agreements restricting rights to sell one's own property|restrictions on EU use of NATO assets|European integration#Defence{{!}}Military aspects of European integration}}
{{Redirect|ROFO|the American convenience store chain|Royal Farms}}

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'''Right of first refusal''' ('''ROFR''' or '''RFR''') is a [[Contract|contractual right]] that gives its holder the option to enter a business transaction with the owner of something, according to specified terms, before the owner is entitled to enter into that transaction with a third party. A first refusal right must have at least three parties: the owner, the third party or buyer, and the option holder. In general, the owner must make the same offer to the option holder ''before'' making the offer to the buyer. The right of first refusal is similar in concept to a [[call option]].

A ROFR can cover almost any sort of [[asset]], including [[real estate]], personal [[property]], a [[patent]] license, a [[screenplay]], or an interest in a business. It might also cover [[Financial transaction|business transaction]]s that are not strictly assets, such as the right to enter a joint venture or distribution arrangement. In entertainment, a right of first refusal on a concept or a [[screenplay]] would give the holder the right to make that movie first while in real estate, a right of first refusal would create incentive for the tenant to take better care of their leased apartment in case the opportunity to purchase arises in the future.<ref>{{Cite web|url=http://www.lawjournalnewsletters.com/sites/lawjournalnewsletters/2006/12/28/drafting-a-better-and-more-effective-right-of-first-refusal/|title=Drafting a Better and More Effective Right of First Refusal|last=December 2006|website=LawJournalNewsletters.com|access-date=2019-11-20}}</ref><ref>{{Cite web|url=https://www.realtor.com/advice/buy/right-of-first-refusal/|title=What Is a Right of First Refusal in Real Estate? Getting First Dibs on Making an Offer|date=2017-07-11|website=Real Estate News and Advice {{!}} Realtor.com®|language=en|access-date=2019-11-20}}</ref>  Only if the holder turns it down may the owner then shop it around to other parties.

Because a ROFR is a contract right, the holder's remedies for breach are typically limited to recovery of [[damages]]. In other words, if the owner sells the asset to a third party without offering the holder the opportunity to purchase it first, the holder can then sue the owner for damages but may have a difficult time obtaining a court order to stop or reverse the sale. However, in some cases, the option becomes a [[property right]] that may be used to invalidate an improper sale.

ROFR also arises in visitation agreements/orders in divorce cases. In such cases, a ROFR may require a custodial parent to offer parenting time to the non-custodial parent (rather than having a child supervised by a third party) any time that the custodial parent or their family is unable to exercise their right to parenting time (such as if the custodial parent needs to travel out of town). Under these circumstances a breach may result in a finding of contempt and any remedies for contempt.

An ROFR differs from a '''Right of First Offer''' (ROFO, also known as a Right of First Negotiation) in that the ROFO merely obliges the owner to undergo exclusive [[good faith]] negotiations with the rights holder before negotiating with other parties. A ROFR is an option to enter a transaction on exact or approximate transaction terms. A ROFO is merely an agreement to negotiate.