Sandbagging meaning

Sandbagging describes a buyer preserving the right to bring an indemnity or warranty claim in an acquisition agreement even if the buyer knew about the breach before completion and still closed. It is a descriptive M&A term (not defined in legislation) used across share and asset purchase agreements. Under the contract laws of England & Wales, Scotland, Northern Ireland and Ireland, a warranty claim is a contractual remedy; reliance is not an element. Accordingly, absent express drafting to the contrary, a buyer’s prior knowledge will not usually bar a warranty claim. Parties therefore negotiate “pro‑sandbagging” clauses (claims allowed notwithstanding investigation or knowledge) and “anti‑sandbagging” clauses (claims excluded where the buyer had knowledge). Key drafting points include: how “knowledge” is defined (actual, constructive or imputed), whose knowledge counts, the effect of the disclosure letter and data room, whether warranties are repeated at completion, exclusive remedy and caps/baskets, and fraud carve‑outs. Market practice differs by jurisdiction. In the UK and Ireland, sellers commonly seek anti‑sandbagging language and broad disclosure/knowledge qualifiers; buyers seek the opposite or rely on the default position. In many US states, sandbagging is permitted by default unless excluded, while certain civil law systems (e.g., France, Germany) are more resistant to sandbagging...