Regarding the no-further-inquiry rule, what is the effect on a trustee who enters into a self-dealing transaction?

• A. The court will automatically void the transaction.
• B. The transaction cannot be defended by arguing its fairness.
• C. The trustee is automatically absolved if the beneficiaries approve.
• D. The trust will cease.

Answer: (B)

The no-further-inquiry rule limits how a court reviews a self-dealing transaction by a trustee once certain safeguards and approvals are in place. When those conditions are met, the court will not reopen questions about whether the deal was fair. That means the trustee cannot defend the transaction by arguing it was fair—the rule effectively bars that fairness defense because the court has already accepted the process and approvals as forming the basis for not further examining the result.

Context helps: this rule functions as a shield to prevent endless litigation over fairness after proper disclosure and beneficiary or independent-approval steps. It does not automatically void the transaction, nor does beneficiary approval automatically absolve the trustee or cause the trust to cease.