arm's length transaction

USAGE SUMMARY

"arm's length transaction" is correct and usable in written English. You can use it in contexts involving business, finance, or legal agreements where parties are acting independently and without influence from one another. For example: "The sale of the property was conducted as an arm's length transaction to ensure fairness." Alternative expressions include "independent transaction" and "market-based transaction."

✓ Grammatically correct

News & Media

Science

Formal & Business

Human-verified examples from authoritative sources

Exact Expressions

5 human-written examples

"In an arm's length transaction," he wrote, U.P.S. would have had to cut in half the prices it charged customers to insure their packages against loss or damage, which would have reduced profits.

The New York Times

"Imagine works to dominate the board of the charter holder, and then it does a deal with the board it dominates -- and that cannot be an arm's length transaction," he said.

The New York Times

Given Sprint's "general and particular sensitivity to governance concerns, it seems extremely poor judgment to bring on a director and then immediately make a deal with his company," Ms. Minow said, "especially without immediately disclosing it along with all the appropriate disclaimers about how it was an arm's length transaction".

The New York Times

The IRS views the sales as an arm's length transaction between willing buyers and sellers who [then become] the best indicia they have [of the shares'] fair market value.

TechCrunch

According to §194 of the German Federal Building Code (BauGB), the valuation by the appraiser (determination of the (expected) market value) should reflect the price that can be achieved in an arm's length transaction on an active market, considering the specific qualities of the property such as its condition and location.

Business Research

Human-verified similar examples from authoritative sources

Similar Expressions

52 human-written examples

The [derivative] arrangements would not have been made available to ordinary customers of the bank in an arm's-length transaction".

The Guardian - Business

Assuming there could be an arm's-length transaction worked out, I wouldn't be surprised to see a transfer of ownership.

The New York Times

Securitisation is supposed to turn a long-term banking relationship, ie, a loan, into an arm's-length transaction, the sale and purchase of a security backed by loans.

The Economist

When Nomura bought IPB for a knockdown price in 1998 an arm's-length transaction, in which it acquired 46% of the shares the central bank hoped it might assume its dud assets.In this section Letter of credit The last crisis?

The Economist

For about $15 a month, the company will also keep the loan an arm's-length transaction, for instance, by collecting payments from the borrower's bank account and depositing them in the lender's account.

The New York Times

Arm's-length transaction?

Forbes

Expert writing Tips

Best practice

When describing financial or legal agreements, use "arm's length transaction" to emphasize that the parties involved are acting independently and without any conflicts of interest, ensuring fairness and transparency.

Common error

Avoid assuming that all transactions involving separate legal entities automatically qualify as "arm's length transactions". The key is whether the parties genuinely act independently, without undue influence or control from one another, irrespective of their formal relationship.

Linguistic Context

The phrase "arm's length transaction" functions as a noun phrase that often acts as an adjective, describing a type of business or legal dealing. It specifies the nature of the interaction between parties, emphasizing their independence.

Expression frequency: Uncommon

Frequent in

News & Media

40%

Science

30%

Formal & Business

30%

Less common in

Reference

0%

Social Media

0%

Wiki

0%

Ludwig's WRAP-UP

The term "arm's length transaction" denotes a dealing where parties act independently, ensuring fairness and preventing conflicts of interest. Ludwig AI confirms the phrase's correct usage, highlighting its prevalence in news, science, and formal business contexts. While not extremely common, it's a crucial concept in finance, law, and business, demanding a clear understanding of its implications. Related phrases include "independent transaction" and "fair market transaction". Remember, simply being separate legal entities doesn't guarantee a transaction qualifies as "arm's length"; genuine independence is key.

More alternative expressions

Phrases that express similar concepts, ordered by semantic similarity:

independent transaction

Focuses on the independence of the parties involved.

fair market transaction

Emphasizes the fairness and objectivity of the transaction's terms.

unrelated party transaction

Highlights the lack of affiliation between the parties.

objective transaction

Stresses the impartiality of the dealings.

arms-length dealing

A synonym emphasizing the process of dealing.

independent business dealing

Highlights independence in a business context.

bona fide transaction

Indicates good faith and genuineness in the transaction.

market-based transaction

Connects the transaction to prevailing market conditions.

at arm's length

Reduced to the bare minimum, but implying fair distance.

impartial transaction

Highlights neutrality and lack of bias.

FAQs

What does "arm's length transaction" mean in business?

In business, an "arm's length transaction" refers to a deal where buyers and sellers act independently and without any relationship that could create a conflict of interest. This ensures fair market value and prevents undue influence.

How can I ensure a transaction is considered "arm's length"?

To ensure a transaction is considered an "arm's length" one, avoid any direct or indirect control between the parties. Document all negotiations and base the transaction on fair market values. Seeking independent legal and financial advice can also help.

What are the implications of not conducting an "arm's length transaction"?

Failing to conduct an "arm's length transaction" can lead to legal and tax implications, including potential challenges from regulatory bodies like the IRS. It may also raise concerns about corporate governance and transparency.

What's the difference between "arm's length transaction" and "related party transaction"?

An "arm's length transaction" involves independent parties acting in their own self-interest. A "related party transaction", on the other hand, involves parties with a pre-existing relationship, such as family members or subsidiaries, which requires extra scrutiny to ensure fairness.