What is a Right of First Refusal?

Definition: Gives a specific party the right to enter into a business transaction before anyone else can.

The Right of First Refusal is one of the most common—and potentially dangerous—clauses found in modern contracts. While it serves a legitimate business purpose for the drafting party, it often disproportionately shifts risk onto the person signing.

Why is it dangerous?

Our AI frequently flags this clause because drafting attorneys use highly complex, convoluted language designed to obscure the true financial or legal risk. If you see this clause in your contract, you must ensure it is precisely bounded.