Buy-Back Clause Law & Legal Definition


Buyback clause is a provision in a contract that allows the seller of property the right or opportunity to repurchase the property under stated conditions. It gives the original seller the first right to buy before any other attempt to sell is made.

Buyback clause can also be inserted as a provision that requires a manufacturer or franchiser to buy back inventory and equipment if the distributor or franchisee's contract is terminated prematurely.

In case of an insurance policy, the buy back clause can be inserted for the reinstatement of coverage that the insurer excludes or cancels if the insured meets certain conditions.