Benzene is produced as a side product when water react with phenyl magnesium bromide during Grignard reactions.
The Grignard reaction involves an R-Mg-X, a carbon chain bound to a magnesium halide, used to form alcohols by attacking carbonyls such as in aldehydes or ketones.
Here R act as a nucleophile and Mg-X act as a electrophile. Instead of attacking carbonyl, which is present in the reaction, the benzene ring will attack water molecules present around, grabbing a H⁺ and pushing away MgBr .
The required reaction is :
PhMgBr + H₂O → Ph-H + MgBrOH
Thus from the above conclusion we can say that it is always advised to use dry Grignard to avoid this reaction.
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