This article provides insufficient context for those unfamiliar with the subject.(August 2019)
Sandbagging, in the field of mergers and acquisitions law, refers to the act of claiming a breach of a contractual representation or warranty despite having known at the time of the contract that it was untrue.
Legal status of sandbagging Edit
United States Edit
Delaware and New York law both generally permit sandbagging when a contract is silent on the point, whereas California law does not allow it unless the contract explicitly permits it. New York case law indicates that sandbagging is not allowed in cases where the information about the falsehood of the representation or warranty came directly from the seller.
United Kingdom Edit
English law provides that "purchaser's knowledge" precludes post-closing remedies for breach of warranty, but that a contract may allow sandbagging based on pre-closing constructive knowledge or imputed knowledge (as opposed to actual knowledge).
Ontario case law has not dealt with default rules for sandbagging but has indicated that sandbagging may be permitted by contract. The civil code of Quebec imposes a requirement of good faith in the exercise of contractual rights which would likely preclude sandbagging.
The Japanese Civil Code does not allow sandbagging unless the contract explicitly permits it.
- Jenkins, John. "Strategic Sandbagging: Let the Buyer Beware". DealLawyers.com. Retrieved 23 August 2013.
- Iovine, Luke (October 2012). "Sandbagging in M&A Deals: Silence May Not Be Golden" (PDF). Paul Hastings. Retrieved 28 January 2014.
- Spilko, Howard (June 2009). "The Importance of Sandbagging Provisions from a Buyer's Perspective: What You Know May Harm You" (PDF). Kramer Levin Naftalis & Frankel. Archived from the original (PDF) on 25 November 2011. Retrieved 28 January 2014.
- Moncrieff, Jonathan (19 October 2012). "A little knowledge can be a dangerous thing: Sandbagging clauses in acquisition agreements". Stikeman Elliott. Retrieved 28 January 2014.
- Solomon, Richard. "Avoiding Japan's legal traps − Common mistakes in a (mostly) civil country". Beacon Reports. Retrieved 22 January 2016.