OGH on Redemption of First Refusal

Apr 19, 2024 Benn-Ibler Rechtsanwälte

A redemption offer must provide the holder of the right of first refusal with at least a minimum of information necessary to decide whether to exercise this right, according to the case law of the Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH).

The defendants in the case at hand were co-owners of a piece of land – the first defendant with 3/10 shares and the second defendant with 7/10 shares. Each had a right of first refusal over the other’s shares, as registered in the land register.

On 30 April 2020, the first defendant sold their shares to the plaintiff. Shortly before their appointment at the notary’s office, the first defendant and the managing director of the claimant agreed to waive the better-bidder clause in return for the claimant assuming the costs of preparing the contract. A corresponding agreement was also signed by both parties. However, the notarised and signed sale and purchase agreement still contained the original better-bidder clause.

On 4 May 2020, the second defendant received the offer and agreement and was asked to indicate their interest in purchasing the shares within the statutory period. The agreement in which the better-bidder clause was waived was not sent to the second defendant.

As the second defendant did not exercise their right of first refusal, the plaintiff sought to have it deleted from the land register. In the absence of a proper offer, the lower courts dismissed the claim.

The OGH upheld the decision of the lower courts.

The better-bidder restriction is a requirement within the meaning of Sections 897 et seq. of the Austrian Civil Code (Allgemeines Bürgerliches Gesetzbuch, ABGB). The existence of a condition precedent or condition subsequent depends on the time of transfer.

The second defendant had not been informed that the better-bidder clause had been waived.

As a result, the second defendant was given the false impression that, in addition to the right of first refusal, the purchase agreement contained an additional condition to which the second defendant was bound for a period of three years. As a result, there was no proper offer because the second defendant had not received the entire necessary information for decision-making. The right of first refusal remains in force.

4 Ob 200/23z (20 February 2024)