CONTRACTUAL PREEMPTIVE RIGHTS AND OTHER SIMILAR LEGAL INSTITUTES

Abstract

The institute of preemptive rights, in its two principal forms – statutory and contractual –grants certain individuals a priority right to acquire a specific asset or right before it is offered on the open market or to the other potential buyers. This right does not establish any immediate entitlement to the asset but becomes operative only upon the owner’s decision to sell, which may never occur.

Contractual preemptive rights arise through the mutual consent of the contracting parties and it is used in legal transactions when it is important to preserve certain business relationships and protect the interests of the parties. The foundation of this type of preemptive right lies in the agreement of the contracting parties, that is, in their mutual consent, which may be manifested either as an autonomous contract on the right of preemption or as a clause within another contract, most commonly a contract of sale.

Contractual preemptive rights regulate the preliminary and contingent legal relationship between the holder of the preemptive right and the owner of the object. In practice, pre-contract typically governs the initial legal relationship, whereas an invitation to offer governs the prospective stage of contractual interaction. Accordingly, these two legal instruments share numerous similarities with the contractual preemptive right. This paper presents the findings of a theoretical and empirical analysis aimed at identifying and examining the legal similarities and distinctions between contractual preemptive rights and the pre-contract, on the one hand, and invitation to offer, on the other.