A transaction such as a sale of property or the lending of money in which all parties involved are acting in their own self-interest and are under no undue influence or pressure from the other parties. Such a situation is the basis for deriving fair market value, and if the transaction is not at arm's length then the actual selling price will likely be less than or greater than the market value.
A colloquial description of a transaction where none of the parties are related to each other or have common interests -- they have each other at "arm's length". An arms-length transaction is generally at fair market value; in a "non-arm's-length" transaction, the relationship between the parties may cause one or the other to accept less than they are entitled or pay more than fair market value.
An Arm's Length Transaction refers to a transaction or a sale in which neither the seller nor the buyer is in a position to take advantage of the other or to receive preferential treatment from the other; both the seller and buyer are trying to maximize their gains. See page 14.
The type of transaction in which parties are dealing with each other without any concessions of the type that might be given a family member, corporate or business affiliate, or other related party; a transaction at fair market value.