The right of first refusal obliges the owner of an item (the seller) to inform the holder of this right about the intended sale of the item to a specific person and under what conditions it is being sold. The seller must offer the item to the holder of the right of first refusal under the same conditions.

The legal basis for the establishment of the right of first refusal can be either a contract²³¹ or the law. Based on this, we distinguish between contractual and statutory rights of first refusal.

A contractual right of first refusal arises from an agreement between parties. It is usually established through a special agreement (contract) between the owner and a person or group of people who wish to have a priority purchase option. The parties can freely arrange the terms of the contractual right of first refusal, specifying conditions, deadlines, and other details governing this right.

A statutory right of first refusal²³² is a right granted by law. The law may provide that certain individuals or groups have the right to purchase specific property under certain circumstances. Examples of statutory rights of first refusal in Slovenia include the right of first refusal for co-owners (if one co-owner wishes to sell their share, they must first offer it to the other co-owners) or the right of first refusal for tenants (if a property owner wishes to sell the property, they must first offer it to the tenant). A statutory right of first refusal is established by law and applies regardless of agreements between parties. It cannot be waived or altered by mutual agreement.

The main difference between a contractual and a statutory right of first refusal is their origin and method of establishment. The contractual right of first refusal is based on an agreement between the parties, while the statutory right of first refusal is prescribed by law and applies regardless of the parties’ wishes.

If the seller transfers ownership of the property to a third party without notifying the holder of the right of first refusal, and if the third party was aware of this right or could not have been unaware of it, the right holder may, within six months from the day they learned of the sale contract, request that the contract be annulled and that the property be sold to them under the same conditions. If the seller provided incorrect information about the sale terms and the third party was aware of this or could not have been unaware, the six-month period begins when the right holder learns of the actual contract terms. This entitlement expires in any case five years after the transfer of ownership to the third party.²³³

Exercises:

1. Was a sales contract concluded?

• Matthew asks George if he will buy his bicycle. George nods.
• Matthew and George agree that Matthew will give George the bicycle, and in exchange, George will give him a computer.
• George offers Matthew, the bicycle seller, €150. Matthew demands €180.
• A, PLC., sells 30 computers to B, Ltd., but the price is not determined.
• Matthew and George agree on selling the bicycle for €100. There is no specific agreement on the place and time of delivery.
• Matthew and George agree on selling the bicycle for €100. The bicycle does not belong to Matthew.
• Matthew and George agree on selling the bicycle, but Matthew will set the price later.
• Matthew and George agree on selling the bicycle, with a price determined by an appraiser.
• Matthew and George agree on selling the bicycle for €100. Matthew, the seller, wants to exclude liability for defects, but George disagrees.
• George and Matthew sign a written sales contract for a bicycle. The bicycle was already destroyed at the time of signing.
• George and Matthew sign a written contract in which one sells a certain amount of marijuana to the other for personal use.
• George and Matthew agree that one will sell the other several kilograms of garden strawberries that are expected to grow next summer.

2. You are the director of company A, d. o. o. You are entering into a sales contract with B as the buyer for a property, parcel no. … cadastral municipality … (ID…).

• What must you check before signing the sales contract, and where can you obtain this information?
• In what form must the contract be concluded?
• What is a land registry permit?
• Write the contract!

3. Define when the seller or buyer is in default and what options the other party has in the event of default!

4. A sells B a personal vehicle of type … B takes possession of the vehicle but does not pay the purchase price.

• What legal protection does A have against B? 
• B refuses to take possession of the personal vehicle that A wants to hand over to him without a justified reason.
• What can A do? Is the sales contract terminated?

5. A and B concluded a sales contract for certain machine components that B had to install in a specific building by 25 February 2016. The delivery deadline for these goods was fixed. B did not deliver the goods on time.

What legal protection does A have against B?

6. A buys a 15-year-old car. The sales contract included the clause “sold as seen”.

• What are the advantages and disadvantages of the “sold as seen” clause?
• In which cases would you, as a buyer, choose a sales contract with such a clause?

7. A ordered 30 cardboard boxes from company B, Ltd., based on a sample. On the day of pickup, A arrived at B’s factory and took possession of the boxes. Some boxes had different printing than the sample, the cardboard felt different to the touch, and bubbles appeared. A notified company B of these defects after 10 days.

• What type of defect is this?
• What are the buyer’s obligations when taking possession of the purchased item?
• Is A entitled to assert warranty claims for material defects? Justify your answer!
• What claims does a buyer have if they have notified the seller of the defect in a timely and proper manner?

8. A purchased a new car from B, an authorised manufacturer and service provider. After approximately nine months and just over 31,000 kilometres driven, the clutch pedal began to make a cracking or clicking sound. At A’s request, the issue was identified at the service centre, and the pedal was replaced, but the clicking persisted. After an unsuccessful second attempt to resolve the issue, A demanded a new, defect-free car from B. As he did not receive one, he filed a lawsuit seeking the equivalent value of a vehicle of the same brand and type. During the proceedings, it was established that the disturbing sound, the so-called click that occurs each time the clutch is pressed, does not affect the car’s technical integrity, usability, or safety, as its vital functions and regular operation are not compromised. The sound’s impact on driving concentration was deemed to be of secondary importance in terms of safety. Additionally, it was found that A continued to use the car normally and that the intensity of the disturbing sound could be mitigated with regular lubrication of the pedal and clutch switch.

Do you think A will succeed with his claim? Justify your answer!

9. Company A, PLC, sold a leather couch and three armchairs to company B, Ltd., for €1,000.00. Three months after delivery, the buyer (B) discovered that the leather caused an allergic reaction due to the dye used. A claims that it was unaware of this defect at the time of concluding the contract. B immediately removed the couch and armchairs from the reception office and rented new ones from company C, Ltd., for a price of €50.00 per month. The removed furniture is stored in a rented warehouse for which B pays €20.00 per month.

• Does this constitute a material defect?
• If so, how should company B proceed?
• What claims can company B assert against company A? Can A immediately withdraw from the sales contract?
• Would a contractual limitation or exclusion of the seller’s liability for material defects be permissible?
• What legal protection would B have if this specific defect appeared seven months after the delivery of the goods?
• When do the buyer’s rights expire if they have notified the seller of the defect in a timely manner?

10. C purchased a washing machine in a technical store. The seller provided C with a warranty certificate. At home, C discovered that the washing machine was not functioning properly. Based on the warranty, C demanded a replacement from the seller.

• Will C succeed with his claim? Justify your answer!
• Can C simultaneously assert claims under both the warranty and liability for material defects?
• Could C claim warranty rights against anyone else?
• When do the buyer’s rights against the manufacturer under the warranty certificate expire? 

11. The seller did not repair or replace the item within the specified period.

What can C do?

12. George sold a personal vehicle to Andrew. Later, the police seized the vehicle from Andrew after determining that it had been stolen from a third party.

• What type of defect is this?
• What claims can the buyer assert against the seller due to this defect?
• When do the buyer’s rights against the seller regarding these defects expire?

13. A sold his property to B without first notifying his brother, C, who had a contractual right of first refusal to purchase the property.

• What can C, whose right of first refusal has been violated, do?
• C claims that the sale contract between A and B is null and void due to the violation of his right of first refusal.
• Is he correct?

14. Seller A committed to delivering the interior furniture for B’s holiday apartments in Bohinj by 1 January 2016. Despite B’s reminders, A only fulfilled the obligation on 1 March 2016. B is engaged in the business of renting out holiday apartments. Due to the absence of interior furnishings, the holiday apartments in Bohinj could not be rented out from 1 January 2016, to 2 March 2016.

What legal remedies can the buyer pursue against the seller?²³⁴