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ARTICLE · 16 OCTOBER 2025

Sandbagging In M&A Transactions: Navigating The Divide Between Canadian And US Law

Sandbagging, where a buyer seeks indemnification for breaches of representations or warranties despite knowing of the breach before closing...

CanadaCorporate/Commercial Law

Sandbagging, where a buyer seeks indemnification for breaches of representations or warranties despite knowing of the breach before closing, remains a complex and often contentious topic in M&A transactions in Canada. While some US states, like Delaware and New York, have developed a pro-sandbagging stance, Canadian law is evolving, exposing significant uncertainty for deal teams navigating cross-border transactions. This insight explores the legal landscape, practical implications and drafting strategies for counsel involved in Canadian M&A deals, including those with US counterparties.

US law: Jurisdictional certainty and predictability

In the US, the approach to sandbagging varies by jurisdiction, though several key states offer a degree of predictability for deal terms.

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