Arm's Length Transaction


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Related to Arm's Length Transaction: Arm's length price

Arm's Length Transaction

A transaction in which the buyer and the seller have no significant, prior relationship. In an arm's length transaction, neither party has an incentive to act against his/her own interest. That is, the seller seeks to make the price as high as he/she can, and likewise the buyer seeks to make it as low as he/she can. The negotiations for an arm's length transaction result in the arm's length price, which is almost always close to the market value of the asset being sold. The term is often used in real estate transactions because family members often sell property to each other at something other than the arm's length price.
References in periodicals archive ?
Considerable concern has been expressed about certain aspects of the new rules, including the authority accorded Revenue Canada to redetermine the nature of transactions out of step with typical arm's length transactions.
47) Similarly, dispositions of property to an unrelated party within a reasonable period of time after such property is acquired from a related party are evidence of arm's length transactions.
Another strategy, common to lenders in arm's length transactions, is to reduce the outstanding debt to a level jan can manage, stretch.
Goldenwest intends to continue buying diamonds from the Israeli firm at arm's length transactions.