In the self-dealing scenario, what rule prevents a court from accepting fairness as a defense?

• A. The no further inquiry rule.
• B. The best interest of the beneficiaries doctrine.
• C. The reasonableness standard.
• D. The business judgment rule.

Answer: (A)

In self-dealing, the no further inquiry rule blocks the court from accepting a fairness defense. When a fiduciary has a conflict and engages in a deal with themselves or their related party, the court won’t simply judge the deal by whether it was fair afterward. Instead, the rule prevents evaluating the terms as a defense and pushes the matter to a tighter standard of scrutiny (entire fairness) to deter conflicts of interest. This is why the option describing the no further inquiry rule is the best choice. The other doctrines—best interests, reasonableness, or the business judgment rule—don’t capture this specific bar on using fairness as a defense in self-dealing.