Written by attorneys · grounded in primary & secondary sources — see below
A contractual obligation imposed by a conveyance or donative instrument that binds the recipient not to transfer the property interest. Breach of the promise exposes the promisor to contract remedies such as damages or an injunction rather than automatic invalidity of the transfer or forfeiture of the estate.
Sources & Authorities
How it applies
Common Examples
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Will Devise With Capped ROFR
Priscilla Parks received a storefront under her father's will. The will granted Stone Mall a right of first refusal at a rent formula fixed at 2012 levels with ninety days to decide. After rents rose sharply, a third-party buyer offered market value. Because the price term no longer reflected current value, the provision operated as a promissory restraint. Stone Mall could enforce the promise only through contract remedies, and the court treated the clause as subject to the rules governing such restraints.
Trust Interest Subject To Promise
Phoebe Park held shares in a family company through a trust. The trust instrument required her to promise never to sell the shares without first offering them to a designated supplier at book value. When Phoebe later received a higher market offer, the supplier sought to enforce the promise. The court recognized the clause as a promissory restraint enforceable only by injunction or damages, not by voiding any attempted sale.
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Restatements
Casebooks
Study Supplements
Dictionaries
Dennis Rourke Corp. v. Ferrero Constr. Co.64 Md.App. 694, 498 A.2d 689 (1985)
Common questions
Frequently Asked
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How does a promissory restraint differ from a disabling or forfeiture restraint?+
A promissory restraint binds the recipient by contract to refrain from alienation and is enforced through damages or injunction. A disabling restraint withholds the power to transfer altogether, while a forfeiture restraint causes the estate to pass to another upon an attempted transfer.
When does a right of first refusal become a promissory restraint?+
Under Restatement (Third) of Property section 4.4, a right of first refusal in a donative transfer is not treated as a restraint if its price and exercise period are reasonable. If those terms are unreasonable, the provision is classified as a disabling, forfeiture, or promissory restraint and judged under the rules applicable to those categories.
Supporting sources
Are promissory restraints on fee simple estates generally valid?+
Forfeiture and promissory restraints on fee simple estates are generally held invalid because they unduly hinder free alienability. Such restraints on life estates or lesser interests are more often upheld if reasonable in duration and purpose.
866 N.E.2d 882 (Mass. 2007)Property
…company now owned and operated by the defendant. [^maj-5]: Section 413(1) of the Restatement of Property (1944) states: "A promissory restraint or forfeiture restraint on the alienation of a legal estate in land which is in the form of a provision that the owner of the estate shall not sell the same without first offering to a…
Trusts and Estates Trusts and Future InterestsTrusts · Alienability of trust interestsUBEFoundational