arm's length transaction

Definition

A transaction between two related or affiliated parties that is conducted as if they were unrelated, so that there is no question of a conflict of interest. Or sometimes, a transaction between two otherwise unrelated or affiliated parties.

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It was an arm's length transaction that took place, which meant that the two companies did not know each other at all.

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Since they were related entities, they had to make sure it was an arm's length transaction so it would not cause any concern by auditors.

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The arm's length transaction was made to ensure that no conflicting interest or personal motives would be involved in the decision making process.

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