arm's length

In business, transaction between two financially unconnected parties where both are acting in their own interests. In an arm's length transaction the deal will be made at current market prices. In the case of related parties, such as companies within the same group, there is provision in UK accounting practice for the parties to disclose their relationship. This is partly to give notice to any third parties that may wish to scrutinize the deal to ensure it was conducted at arm's length.