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What should be included in a Right of First Refusal Agreement?

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Introduction
Right of First Refusal Agreement
Essential Clauses in a Right of First Refusal Agreement 3.1. Identification of the Parties 3.2. Definition of the Subject Property 3.3. Triggering Event 3.4. Notice Period 3.5. Matching Right 3.6. Timeframe for Exercise of the Right 3.7. Conditions Precedent 3.8. Termination Clause 3.9. Governing Law and Dispute Resolution
Conclusion

Introduction

This response will address the question of what should be included in a Right of First Refusal Agreement, drawing upon relevant provisions of the Kenyan law.

Right of First Refusal Agreement

A Right of First Refusal Agreement (ROFR) is a contractual agreement that grants a party (the "holder") the exclusive right to purchase or lease a specific property (the "subject property") before it is offered to any other party. This agreement essentially gives the holder the first opportunity to acquire the property if the owner decides to sell or lease it.

Essential Clauses in a Right of First Refusal Agreement

A well-drafted ROFR agreement should include the following essential clauses:

3.1. Identification of the Parties

The agreement should clearly identify the parties involved, including the owner of the subject property and the holder of the right of first refusal. This information should be stated in full, including their legal names and addresses.

3.2. Definition of the Subject Property

The agreement must clearly define the subject property. This should include a detailed description of the property, including its location, size, and any relevant features. It is advisable to include a legal description of the property, such as a title deed or survey plan, to avoid any ambiguity.

3.3. Triggering Event

The agreement should specify the event that triggers the holder's right of first refusal. This could be a decision by the owner to sell, lease, or otherwise dispose of the subject property. The agreement should clearly define the triggering event and the circumstances under which it will be considered to have occurred.

3.4. Notice Period

The agreement should specify the notice period that the owner must provide to the holder before offering the subject property to any other party. This notice period should be reasonable and allow the holder sufficient time to consider the offer and exercise their right of first refusal.

3.5. Matching Right

The agreement should specify the holder's right to match any offer received by the owner for the subject property. This means that the holder has the right to purchase or lease the property at the same price and terms as the offer received by the owner.

3.6. Timeframe for Exercise of the Right

The agreement should specify the timeframe within which the holder must exercise their right of first refusal after receiving notice from the owner. This timeframe should be reasonable and allow the holder sufficient time to secure financing or make other necessary arrangements.

3.7. Conditions Precedent

The agreement may include conditions precedent that must be satisfied before the holder can exercise their right of first refusal. These conditions could include obtaining financing, conducting due diligence, or satisfying other requirements.

3.8. Termination Clause

The agreement should include a termination clause that specifies the circumstances under which the ROFR can be terminated. This could include the expiration of a specified period, the occurrence of a specific event, or the mutual agreement of the parties.

3.9. Governing Law and Dispute Resolution

The agreement should specify the governing law and the dispute resolution mechanism in case of any disagreements between the parties. This could include specifying the jurisdiction of the courts or the use of alternative dispute resolution mechanisms such as arbitration.

Conclusion

A Right of First Refusal Agreement is a valuable tool for protecting a party's interest in acquiring a specific property. By including the essential clauses outlined above, the agreement can ensure that the holder's right of first refusal is clearly defined and enforceable. It is important to consult with a legal professional to ensure that the agreement is drafted in accordance with Kenyan law and meets the specific needs of the parties involved.