Sandbagging

Definition

Claiming on a broken promise you already knew had been broken.

Why It Matters

The agreement usually settles this one way or the other, and a buyer has to know which. A pro-sandbagging clause keeps the claim alive whatever the buyer knew, which puts the cost of a poor disclosure on the seller. An anti-sandbagging clause says knowledge kills it, which quietly turns every diligence finding into a choice: raise it and lose the indemnity, or stay quiet and hope. Silence in the contract is the worst of the three, because the answer then rests on state law nobody in the room has read.

In numbers: Under an anti-sandbagging clause, a $120,000 problem found in diligence and left unpriced is a $120,000 problem you own.