The law generally recognizes that a director or officer of a corporation occupies a fiduciary relationship to the corporation. This relationship has been described as analogous to that of an agent to his principal or a trustee to his beneficiary.1 Therefore it is logical that a director cannot deal with his corporation like a stranger at arm's length, but is bound by the rules of fairness and good faith which the courts have imposed on fiduciaries for the protection of those whose interests are confided to their care. The courts are greatly divided as to what rules or standards of fairness will be applied in considering the validity of a transaction where the director contracts in his own behalf with his corporation or in the case of contracts among several corporations with boards having common or interlocking directors. The purpose of this note is to attempt to present, generally, the various rules applied in this situation and, by an evaluation of the decisions, determine where the West Virginia court stands on the proposition.
T. E. P.,
Contracts Between a Director and His Corporation,
W. Va. L. Rev.
Available at: https://researchrepository.wvu.edu/wvlr/vol59/iss4/8