In Acme Widgets' conflict of interest scenario, which statement is MOST accurate regarding the chances of success in a lawsuit?

• A. Acme's chances are good because it is clear that Bruce had a conflict of interest.
• B. Acme's chances are poor because the company was aware of the situation.
• C. Acme's chances depend on whether Bruce received favors.
• D. Acme's chances are good since the purchases were reviewed by a senior manager.

Answer: (B)

The main idea is that disclosed conflicts with proper governance can shield a company from liability. When a potential conflict of interest is acknowledged and steps are taken to manage it—such as making the conflict known and having a senior manager review related purchases—those actions support that the company acted with due care and in good faith. This strengthens a defense under the business judgment rule, making it harder for a plaintiff to prove a breach of fiduciary duty. In this scenario, Bruce’s conflict was known and oversight existed, so Acme’s chances of a successful lawsuit are reduced. The other options assume that mere existence of a conflict or lack of oversight automatically leads to liability, which isn’t as strong given the documented awareness and review.