The Footnote That Decided Nothing, and the Clause Nobody Added

In 2018 the Delaware Supreme Court dropped a footnote in Eagle Force Holdings v. Campbell, with Justice Valihura noting that the court had never actually decided whether a buyer who knows a seller's representations are false can still sue for breach after closing ^[1]. A new study of 3,642 publicly filed M&A agreements from 2010 through 2025, by Mitu Gulati of Virginia, Stephen Choi of NYU and Molly Ball, finds that the bar's answer to that uncertainty was to stop writing about it: silence on sandbagging rose from 49.4% of deals before Eagle Force to 60% during the years of ambiguity and 72.0% after the Chancery's 2022 Arwood decision ^[8][9][17].

The stakes are ordinary and material. Buyers rely on pro-sandbagging rules to protect the representations they paid for, and to stop sellers from using the buyer's own diligence as a shield against liability ^[4]. Then-Chief Justice Strine, dissenting in part in Eagle Force, confirmed that Delaware had not yet resolved the question ^[2], and practitioners read the exchange as a signal that the ground had moved ^[3].

The advisory response was fast and close to unanimous. Memos issued from Ballard Spahr, Goodwin Procter, Mayer Brown, Paul Weiss and Kramer Levin; the ABA ran CLE programming; a slide deck from an M&A panel at Northwestern's Securities Regulation Institute told the room not to assume silence was safe anymore and to insert an express pro-sandbagging clause ^[5][6]. Even Glenn West of Weil, who argued in October 2018 that sandbagging was largely a myth because buyers had little incentive to do it, acknowledged the consternation and supplied a model clause for those who wanted one ^[7].

On the authors' numbers, express clauses of either kind fell from 50.6% of deals to 28.0% across the same period, a drop of 22.6 percentage points, or roughly 45% of the starting share ^[1][2][3]. That is the reverse of the standard assumption that sophisticated drafters answer legal uncertainty with clearer contracts ^[8].

The authors' explanation is that the doctrinal risk was retired informally before it could be priced. Vice Chancellor Laster's 2018 Akorn opinion quoted the old pro-sandbagging language as if the footnote had never been written, and VC Slights in Arwood in 2022 and VC Laster again in Dura Medic in 2025 reaffirmed Delaware as a pro-sandbagging jurisdiction ^[11][12]. All of that was Chancery; the uncertainty had come from the Supreme Court ^[13]. What closed the gap, according to more than fifty interviews with senior M&A lawyers, was a channel that contract scholarship rarely models: ABA panels, Corporate Laws Committee meetings and small dinners ^[14][15]. The story the authors heard repeatedly is a sitting Delaware judge on an ABA panel miming a phone call to Strine about the footnote and reporting back to an agitated room, "He doesn't remember" ^[16].

So the reflex that stuck was not the clause. It was the apparatus around it: a memo library, a CLE circuit and an off-the-shelf model clause ^[5][6][7], now available to any buyer's counsel who wants to spend negotiating capital on it. Where deals do speak, they speak for buyers, since anti-sandbagging clauses are only a small fraction of express provisions ^[10]. The default did the work; the drafting did not.