arm's length transaction


arm's length transaction
Said of a transaction negotiated by unrelated parties, each acting in his or her own self interest; the basis for a fair market value determination. A transaction in good faith in the ordinary course of business by parties with independent interests. Commonly applied in areas of taxation when there are dealings between related corporations, e.g. parent and subsidiary. Inecto, Inc. v. Higgins, D.C.N.Y., 21 F.Supp. 418.
The standard under which unrelated parties, each acting in his or her own best interest, would carry out a particular transaction. For example, if a corporation sells property to its sole shareholder for $10,000, in testing whether $10,000 is an "arm's length" price it must be ascertained for how much the corporation could have sold the property to a disinterested third party in a bargained transaction

Black's law dictionary. . 1990.

Look at other dictionaries:

  • Arm's Length Transaction — A transaction in which the buyers and sellers of a product act independently and have no relationship to each other. The concept of an arm s length transaction is to ensure that both parties in the deal are acting in their own self interest and… …   Investment dictionary

  • arm's length transaction — sandoris įprastinėmis rinkos sąlygomis statusas T sritis Gynyba apibrėžtis Sandoris, sudaromas laikantis principo, kad dalyvaujančios pusės yra nesusijusios, siekiant išvengti bet kokio interesų konflikto. atitikmenys: angl. arm s length… …   Lithuanian dictionary (lietuvių žodynas)

  • arm’s length transaction — A transaction at *fair market value between unrelated parties, or a transaction made as if it were between unrelated parties for example, All the sales between the corporation’s overseas branches are made at arm’s length …   Auditor's dictionary

  • arm's length transaction — сделка между неаффилированными лицами, предполагает использование рыночных цен и тарифов и отсутствие между контрагентами фидуциарных отношений …   Glossary of international commercial arbitration

  • arm`s length transaction — business dealing between two parties that are independent of each other …   English contemporary dictionary

  • arm's length — n: the condition of the parties to a business deal in which each has independent interests and one does not dominate the other often used in the phrase at arm s length a contract made at arm s length arm s–length adj Merriam Webster’s Dictionary… …   Law dictionary

  • Arm's length principle — The arm s length principle (ALP) is the condition or the fact that the parties to a transaction are independent and on an equal footing. Such a transaction is known as an arm s length transaction . It is used specifically in contract law to… …   Wikipedia

  • arm’s length — /ɑ:mz leŋθ/ adjective ♦ arm’s length transaction a transaction which is carried out by two parties with no connection between them (resulting in a fair market value for the item sold) ♦ to deal with someone at arm’s length to deal as if there… …   Dictionary of banking and finance

  • arm’s length — adj. Distant, not intimate; describes a good faith, fair market transaction by parties with relatively equal bargaining power, in which neither one forces the other to accept terms. The Essential Law Dictionary. Sphinx Publishing, An imprint of… …   Law dictionary

  • Arm's Length Market — A financial market consisting of parties that have no relationship or contact with one another aside from the transaction at hand. In the United States, the majority of exchanges are considered to be arm s length, where buyers and sellers are… …   Investment dictionary


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