Arm's Length Transaction

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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 ?
The committee heard a company would be set up to deliver the franchise, while an arms-length firm would also be established to work on the South Wales Metro.
The changes could see hundreds of council employees shifted into arms-length organisations which would then provide services, as is done by Cardiff Bus.
1.482-2(b) cost safe harbor and to bring the existing rules more in line with the arms-length standard.
Each of Gateshead Council's 26,442 tenants and leaseholders will receive a questionnaire this week, asking if they want to support the setting up of an arms-length group to manage council housing in the future.
has entered into an arms-length agreement to acquire 100 per cent of the issued and outstanding shares of Heath & Sherwood Drilling Inc., a Kirkland Lake area company.
Moreover, to the extent the guidelines require the disclosure and measurement of returns for members that are not a party to a controlled transaction that is being tested for comparability under the arms-length principle, we question whether the documentation requirement is enforceable under the Canadian, U.S., or the other PATA countries' rules.
The Ontario Family Health Network (OFHN) was created in March 2001 as an arms-length agency that provides family physicians with information, administrative support and technology funding to support the voluntary creation of Family Health Networks in their communities.
For example, Fitter recommends that co-op boards review vendor lists twice a year to insure that only arms-length relationships exist.
Unison, which has almost 4,000 members at Cardiff council, is also opposed to proposals for arms-length companies being set up to operate some authority services.