Arm's Length Legal Meaning and Definition

Here is a simplified definition of the legal term Arm's Length.

Arm's Length (noun): In legal or business terms, "arm's length" refers to transactions, deals, or relationships that are carried out by two parties under conditions where they act independently and have no relationship other than that of buyer and seller. The goal is to ensure that both parties are acting in their own self-interest and are not subject to any pressure or undue influence from the other party or from a shared interest. This is important to prevent conflicts of interest and to ensure fair market value or pricing in transactions. Common examples may include sales between family members or companies with common shareholders.