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. [1]
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. [2] 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. [3]
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). [4]
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. [4]
The Japanese Civil Code does not allow sandbagging unless the contract explicitly permits it. [5]
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. [1]
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. [2] 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. [3]
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). [4]
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. [4]
The Japanese Civil Code does not allow sandbagging unless the contract explicitly permits it. [5]