Courts will closely scrutinize conflict of interest and self-dealing transactions (i.e., having an individual and/or corporation on both sides of the same transaction). Traditionally, these types of transactions are subjected to the “entire fairness review”. In order to survive this standard review, the price and the dealing must be fair. Globe Woolen Co. v. Utica Gas & Elec. Co., 224 N.Y. 483 (fundamental business organization case holding that there is a breach of fiduciary duty of loyalty despite a director, who served on two boards of two companies, did not vote on a transaction because neither fair price nor fair dealing was present). Fair price is typically the equivalency of value between what the corporation gave up and what the corporation received. Fair dealing has several factors (none dispositive) of candor and disclosure:
1) Not only abstaining vote, but excusing yourself to not exert pressure on the deal;
2) Imbalance between the corporations at negotiation;
3) Involvement of disinterested advisors; and
4) Candor – director should not stand in silence when he or she is aware that the agreement is detrimental to one side.