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"Pre-emptive rights" are not limited to contracts of sale

If you are fortunate enough to secure a lucrative contract to provide goods or services
to some organisation, you should try to ensure that the contract will be renewed, and not be a mere flash in the pan.

One way to do this is to give good service to your client, and hope that this will persuade the latter to renew your contract when it comes to the end of its allotted period. Better still is to try to negotiate for a right of renewal or of first refusal to be written into the first contract.

Such clauses are common in the context of a sale. So, for example, I may enter into a contract with you that if you ever sell your house, you will give me a right of first refusal. The effect of such an agreement is that you cannot sell the house to anyone else, unless you have first offered it to me at the same price and I have declined to buy it.

Rights of renewal or first refusal in a contract for services

There is no reason in principle why similar clauses cannot be used in contracts for the rendering of services. (See Super Rent (Pty) Ltd v Bax Global (Pty) Ltd 2006 (3) SA 422 (W) at 426A.)

So for example, if I successfully tender for a contract to provide your airline with pre-packaged food to be served in-flight for a period of one year, I could negotiate for a clause in the contract saying that if, at the expiry of the one year period, you call for fresh tenders,you will give me the right not merely to tender in competition with everyone else, but to match any other tender that you are minded to accept. This will, in effect, give me a right of first refusal.

The clause in the contract setting out the right of first refusal must be carefully worded to ensure that I not only have the right to tender for renewal of the contract, but that I am given the right to match any other tender that you receive, in which event, you are obliged to offer it to me(see the Super Rent decision, above).

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