Sandbagging is the buyer’s right under a share sale or asset sale agreement to bring a warranty claim against the seller after completion in respect of a matter the buyer already knew about before signing or completion. A “pro-sandbagging” clause expressly preserves the buyer’s right to claim regardless of pre-existing knowledge; an “anti-sandbagging” clause prevents the buyer from claiming where they had actual or constructive knowledge of the breach.
In Australian sub-$20M deals, the position is often left silent in the agreement, in which case the common law approach applies. Sellers should push for express anti-sandbagging language; buyers should push for express pro-sandbagging language or silence with strategic disclosure.