Definition of Arms-length transaction:
Basis of determining fair market value (FMV), it is a dealing between independent, unrelated, and well informed parties looking out for their individual interests. Transactions involving family members, and parent companies and subsidiaries, are deemed arm-in-arm dealings. To qualify as an arms length transaction, neither of the involved parties may have any interest in the transactions consequences to the other party.
How to use Arms-length transaction in a sentence?
- Both companies engaged in an arms-length transaction , when they traded their respective inventories of proprietary farm equipment to each other.
- You need to be wary of anyone you are having an arms-length transaction with and what their true motives are.
- You should do an arms-length transaction with anyone that you havent done business with before so you can get a read on them.
Meaning of Arms-length transaction & Arms-length transaction Definition