The Right of First Refusal Clause Explained, With Samples (2026)

A right of first refusal, often shortened to ROFR, gives a party the chance to match a deal before the other party can accept it from someone else. In practice: before an owner sells an asset, shares, or property to a third party, it must first offer it to the ROFR holder on the same terms the third party offered. If the holder matches, it gets the asset; if it declines, the owner is free to sell to the third party. It is common in shareholder agreements, joint ventures, leases, and supply relationships, wherever one party wants the option to keep an asset in friendly hands. ## What problem it solves The clause solves a loss-of-control problem. A shareholder does not want a co-owner selling shares to an outsider, perhaps a competitor, without a chance to buy them first. A tenant may want the first chance to buy the building it occupies. A distributor may want first call on a new product line. A right of first refusal lets the holder protect its position without having to buy anything now; it simply reserves the right to step in later, on the terms a genuine third party has set. That link to a real third-party offer is what distinguishes it from a plain option to buy. ## Why it is negotiated The owner dislikes a ROFR because it chills its ability to sell: many buyers will not spend time and money negotiating a deal that the ROFR holder can simply snatch at the last moment. So owners push for a short exercise window, a high threshold before the right triggers, and carve-outs for transfers to group companies or family. Holders push for a long window, a low trigger, and tight anti-avoidance wording so the owner cannot dodge the right by dressing a sale up as something else. The exercise period, the definition of the triggering transfer, and the matching terms are the heart of the negotiation. ## Right of first refusal versus right of first offer These are often confused. Under a right of first refusal, the owner must find a third-party offer first, then give the holder the chance to match it. Under a right of first offer (ROFO), the owner must offer the asset to the holder first, before going to the market, and only if the holder declines can the owner sell to a third party, usually on terms no better than those offered to the holder. A ROFO gives the owner more freedom and is generally seen as less of a drag on a sale; a ROFR gives the holder more protection. Knowing which one you are drafting matters, because the mechanics are different. ## Sample wordings > Sample wording (illustrative, adapt to your contract and jurisdiction):

If a Shareholder (the Seller) receives a bona fide written offer from a third party to buy any of its Shares that the Seller wishes to accept, the Seller shall first offer those Shares to the other Shareholders (the Offerees) on the same terms and at the same price. The Offerees shall have 20 business days to accept in writing. If the Offerees do not accept all the offered Shares within that period, the Seller may sell them to the third party within 60 days on terms no more favourable to the third party than those offered to the Offerees. > Sample wording (illustrative, adapt to your contract and jurisdiction): This right of first refusal does not apply to a transfer of Shares to a wholly owned group company of the Seller, provided that company agrees in writing to be bound by this clause and to transfer the Shares back to the Seller if it ceases to be wholly owned. Any purported transfer in breach of this clause shall be void and of no effect. ## Key drafting pitfalls - No clear exercise window, so the parties argue about how long the holder has to decide.

• Not requiring the third-party offer to be bona fide and in writing, which lets an owner manufacture a sham high offer to defeat the right.
• Forgetting the same terms requirement, so the owner sells to the third party more cheaply than it offered the holder.
• No anti-avoidance wording, so the owner sidesteps the ROFR by transferring to a related party, or by selling a parent company instead of the asset.
• Setting the window so long that it freezes any real sale, or so short that the holder cannot realistically fund a purchase.
• Confusing a ROFR with a ROFO and drafting the wrong mechanics.
• Not saying that a transfer in breach is void, leaving the holder with only a damages claim after the asset is gone. ## Jurisdiction note Rights of first refusal are generally enforceable as contract terms across the United States, United Kingdom, and India, but a few local points matter. Where the asset is shares in a company, the clause usually needs to sit alongside the company's constitution or articles so the restriction binds and share transfers can actually be blocked; in India this interacts with the Companies Act 2013 and the company's articles. Where the asset is land, local property-law formalities and registration can affect enforceability against a later buyer. Because these overlaps with company and property law vary, confirm the drafting under the governing law and the relevant corporate documents. This page is general information, not legal advice. ## Where this fits in day-to-day contract work The common failure is a ROFR that looks fine until it is tested: no bona fide-offer requirement, no anti-avoidance wording, or a sale structured as a share deal that slips the trigger. Checking that the right has a clear window, same-terms matching, anti-avoidance language, and a void-transfer consequence, and that it is mirrored in the articles where shares are involved, is a per-clause review Adira is built to surface in one AI workspace tuned to your company and built on Claude. The guidance above stands on its own. ## Bottom line A right of first refusal lets you match a third party's deal before the owner can accept it, protecting your position without buying now. Set a realistic exercise window, require a bona fide written offer, insist on the same terms, add anti-avoidance wording, and make breaching transfers void. Be sure you are drafting a ROFR and not a right of first offer, and where shares or land are involved, make the right bite through the relevant corporate or property documents.