Contract Glossary
Right of First Offer
Definition
A contractual right requiring one party to offer an asset or opportunity to the rights holder before offering it to third parties. Unlike a right of first refusal (which lets you match a third-party offer), a right of first offer gives you the first chance to make a bid — before anyone else even sees the opportunity.
In Practice
You're a commercial tenant with a right of first offer on the adjacent office suite. When the landlord decides to lease that space, they must come to you first with proposed terms — say $45/sq ft for a 3-year term. You can negotiate and accept, or decline. Only after you decline can the landlord market the space to other tenants. If you had a right of first refusal instead, the landlord would market the space first, get a third-party offer, and then let you match it.
Example Clause
If Owner decides to sell, lease, or otherwise dispose of the Property, Owner shall first deliver a written notice to Holder specifying the material terms upon which Owner is willing to transact (the 'Offer Notice'). Holder shall have thirty (30) days from receipt of the Offer Notice to accept such terms or propose modified terms for negotiation. If Holder declines or fails to respond within such period, Owner may proceed to offer the Property to third parties on terms no more favorable than those offered to Holder.
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Frequently asked questions about right of first offer
Timing. A right of first offer (ROFO) means you get the first chance to bid before anyone else. A right of first refusal (ROFR) means the seller can market to everyone, but you get the last chance to match the best offer. ROFO is generally better for the seller (they aren't chilled by a matching right) and gives the holder an earlier but less informed opportunity. ROFR gives the holder more information (they see the market price) but can discourage third-party offers.
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Create your contractThis content is for informational purposes only and does not constitute legal advice. For contracts with significant financial or legal implications, review by a qualified attorney is recommended.