26 Apr 2022
Delaware Court of Chancery Affirms Pro-Sandbagging Stance
Sandbagging, in the context of an M&A transaction, refers to a situation where the buyer closes an acquisition based on certain representations and warranties it knows to be false, and then seeks to hold the seller liable post-closing for breach of those same representations and warranties. In the recent Delaware Court of Chancery’s decision in Arwood v. AW Site Services, LLC, the court affirmed its pro-sandbagging stance in rejecting seller’s argument that buyer was foreclosed from asserting claims for contractual breach of representation and warranty in the acquisition agreement because buyer knew that such seller representations were false prior to closing. Review this guidance discussing the Arwood decision.
Related Content
- Sandbagging Clauses
Use this template, which includes both pro-sandbagging and anti-sandbagging provisions, along with practical guidance and drafting notes, in your next transaction.
- Silence on Sandbagging in Private Acquisitions Chart (CA, DE, NY, TX)
Reference this chart to understand jurisdiction-specific guidance for states identified as either “pro-sandbagging” or “anti-sandbagging” jurisdictions.
- Representations and Warranties in Acquisition Agreements
Refresh your knowledge about the typical representations and warranties found in an acquisition agreement and the considerations for drafting and negotiating anti-sandbagging provisions.
- Key Representations and Warranties in Acquisition Agreements (Chart)
Stay up-to-date on buyer and seller preferences when drafting and negotiating sandbagging provisions with this chart, which provides recent transaction searches from Market Standards.
Practical Guidance Updates
Featuring the latest updates from your Practical Guidance account.
- The Practical Guidance Journal Spring 2022 Edition includes market trends on de-SPAC transactions.
- Check out the new Practical Guidance Author Center! Learn about the 1500+ leading attorney authors contributing to our 21 practice areas, and find out how you can Become a Practical Guidance Author.
- Document alerts allow you to stay current on legal developments that affect your practice. Find out how to set up your document alerts.
Experience results today with practical guidance, legal research, and data-driven insights—all in one place.
Experience Lexis+