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An arm’s length agreement is one which is freely entered into by parties who don’t have a special relationship or control over one another. An arm’s length agreement is indicated by the fairness of price, conditions, and other terms of the agreement. For example, an agreement between relatives or agreements involving a deal on the side may not be considered arm’s length agreements because they may not reflect the true value of the deal.

Yusef El
Own and Creator of Private Side Solutions and SPC University