A pro-sandbagging clause preserves the buyer’s indemnity claim regardless of its knowledge of the breach before closing. An anti-sandbagging clause bars it.
The default varies. Some jurisdictions treat representations as bargained-for contractual allocations enforceable regardless of reliance, permitting sandbagging. Others require reliance, which knowledge defeats. Because the default is unpredictable, silence is the worst outcome and is common.
Pro-sandbagging language states that the representations survive and are not affected by any investigation or knowledge, including knowledge acquired before closing.
Anti-sandbagging language bars claims for matters of which the buyer had actual knowledge before closing, sometimes extending to constructive knowledge — which sellers push for and buyers should resist, since it converts every diligence document into a waiver.
Knowledge definitions. Whose knowledge, and whether it includes information in the data room whether or not read. A deemed-knowledge provision covering everything disclosed is effectively a broad anti-sandbagging clause.
The practical middle. Buyers who discover a breach before signing should negotiate it into the price or into a specific indemnity, rather than relying on a sandbagging clause. Sellers should insist on schedule updates before closing with a defined consequence.