In the acquisition context, “sandbagging” refers to circumstances where one party, typically the buyer, enters into a purchase agreement knowing representations and warranties made by another party, typically the seller, are false. Alternatively, the buyer may enter into the agreement in good faith, but then discover the falsity prior to closing. In either case, a purchase agreement may (1) permit indemnification claims in such circumstances (a “pro-sandbagging” provision); (2) disclaim indemnification claims in such circumstances (an “anti-sandbagging” provision); or (3) remain silent on the subject. When an agreement is silent, the governing law will determine whether a party may “sandbag” an opponent and then later assert an indemnification claim based upon the breach, or not.

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