The New Jersey Superior Court case of St. George’s Dragons L.P. v. Newport Real Estate Group illustrates a number of interesting and important points about the drafting and interpretation of right-of-first-refusal provisions. At the highest level, the most important of these is that the grantor of such rights needs to be quite clear about its expectations with regard to their exercise. St. George’s also highlights the need for drafters to consider all possible future scenarios and is interesting in part because it challenges the reader to think, “What might I have done to avoid this result?” This is emphasized by the vigorous response launched by the plaintiff landlord, who, having made his bed in one deal, fought in this litigation to undermine that deal when a better opportunity appeared within reach.

Facts of the Case

In 2000, St. George’s Dragons L.P. (the landlord) and Nazmiyal Inc. (the tenant) entered into a lease that contained a fairly typical right of first refusal provision: “If the Landlord at any time … receives one or more bona fide offers from third parties to purchase the demised premises … and if such offer is acceptable to the Landlord, then Landlord agrees to notify Tenant in writing, giving the name and address of the Offeror, and the price, terms and conditions of such offer, and Tenant shall have thirty (30) days … in which to elect to purchase the property for the consideration contained in the bona fide offer,” as noted in the Superior Court opinion.

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