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Arms-length Transaction



An arms-length transaction is a transaction between two parties who have a personal or family relationship. The transaction is kept separate (at arms-length) from their personal relationship. An arms-length transaction can be used to avoid the appearance of a conflict of interest or to keep the relationship "business-like" so the personal relationship is not affected.

Tim and his father had an arms-length relationship when they worked in the business that they jointly owned. They never talked business at home and they treated each other at work as colleagues rather than father and son.

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