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Question
The board of directors of Meckes Corporation, at a regular meeting of the board, entered into a contract with Peter, one of the directors. The agreement called for the sale to Peter of a retail store the corporation operated. There were 12 board members, 10 of whom were present at the meeting. One of the directors present was Peter. After a lengthy discussion in which Peter participated, nine directors, including Peter, voted in favor of the contract and one voted against it. In view of these facts, which of the following is correct?
A. A director cannot enter into a contract with a corporation of which he is a director.
B. The contract between Peter and the corporation is illegal.
C. If the contract is unfair to the corporation, it is voidable at the option of the corporation.
D. The contract is valid regardless of whether its terms are harsh, because Peter's presence was not necessary for a quorum and his vote was not necessary for approval of the contract.
Answer
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