Asked by Grant Friesen on Jul 09, 2024
Verified
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.
Voidable Contract
A contract that may be legally voided at the option of one of the parties due to reasons like fraud, duress, or misrepresentation.
Disinterested Directors
Board members who do not have a personal financial interest in a corporate decision, ensuring unbiased governance.
Quorum Of The Board
The minimum number of board members that must be present at a meeting to legally conduct business.
- Acknowledge the ethical concerns and potential interest conflicts in the decision-making processes of corporate management.
Verified Answer
Learning Objectives
- Acknowledge the ethical concerns and potential interest conflicts in the decision-making processes of corporate management.
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