The board of directors of Filex Corporation at a regular meeting of the board entered into a contract with Ginger Grant,one of its directors.This contract called for Filex to purchase 120 acres of land from Ginger.There were ten members on the board,eight of whom were present at the meeting.One of the directors present was Ginger.All the other directors were disinterested in the transaction and not related to Ginger.After a lengthy discussion,six directors voted in favor of the contract and two voted against it.Ginger voted for the contract.Which of the following is true?

A) The contract between Ginger and the corporation is illegal and invalid.
B) The contract is valid since it was approved by a majority of a quorum of the board.
C) The contract becomes void if the corporation proves that the contract was unfair to it.
D) The contract is voidable unless Ginger proves that the contract is fair to the corporation.

Question

Zybrea Knight · Accepted Answer

Final Answer : C, Explanation :  Even though disinterested directors' approval has been obtained for the contract between Ginger and the corporation,courts will void this conflict-of-interest transaction if the corporation proves that the contract was unfair to it.

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