Legal Definitions - first refusal, right of

Definition: The right of first refusal is a contractual agreement that gives a potential buyer the right to match the terms of a third party's higher offer. For example, if a person has the right of first refusal on a property, and someone else offers to buy it for a certain price, the person with the right of first refusal can match that offer and buy the property instead.

Example: Beth has a right of first refusal on the purchase of Sam's house. If Terry offers to buy the house for $300,000, Beth can match this offer and prevent Terry from buying it.

Explanation: This example illustrates how the right of first refusal works. Beth has the right to buy the house before anyone else, and if someone else makes an offer, she has the option to match it and buy the house instead. This gives her an advantage over other potential buyers and ensures that she has the opportunity to purchase the property if she wants to.