Sandbagging: A Primer

What Is Sandbagging?

In the 19th century, "ruffians roamed the streets" and robbed "unsuspecting victims" using a tactic knowing as "sandbagging": They wielded "ostensibly harmless socks" that were in fact "filled with sand and used as weapons." ¹

Today, sandbagging has a different - and, thankfully, less violent - meaning. It describes a buyer that asserts a claim for breach even though it knew, or had reason to know, before the deal closed that a representation was untrue. In other words, the buyer had knowledge of the breach, or the relevant facts that led to the breach, but went through with the deal anyway, only to bring a claim for breach after closing.

This article explores how transactional practitioners address sandbagging in acquisition agreements, and the default rules that courts may apply when the deal parties are silent on the issue.