Arm’s Length Transaction

Definition of ‘arm’s length transaction’

A transaction in which the buyers and sellers of a product act independently and have no relationship to each other.

The concept of an arm’s length transaction is to ensure that both parties in the deal are acting in their own self interest and are not subject to any pressure or duress from the other party.

The TCA explains ‘arm’s length transaction

The concept of an arm’s length transaction commonly comes into play in the property market (incl Timehare). When determining the fair market value of a piece of property, the price for the property must be obtained through a potential buyer and seller operating through an arm’s length transaction, otherwise, the agreed-upon price will likely differ from the actual fair market value of the property.

For example, if two strangers are involved in the sale and purchase of a house, it is likely that the final agreed-upon price will be close to market value (assuming that both parties have equal bargaining power and equal information about the situation). This is because the seller would want a price that is as high as possible and the buyer would want a price that is as low as possible.

This contrasts with a situation in which the two parties are not strangers. For example, it is unlikely that the same transaction involving a father and his son would yield the same result, because the father may choose to give his son a discount because of the influence of natural love.

Arms length connections are another issue in that if one party promotes another and bind the contracting party to use that other. Therefore the question is “is that other person operating at and arms length” if not a delusion may have been perpetrated and the entire post contract events could be entirely unravelled.

In timeshare we have purported consumer association in bed with the resorts, they are financed by those resorts and assist them. Equally re seller support the resort and their Affiliations such as I have described and in certain resorts are manufactured for a reason and a purpose. Clearly those reasons and purposes are not at an arm’s length.

Why? That is described in that tale “the king is naked” when presented with a questioning barrister he will ask “what is the purpose of the affiliation”. “who benefits” , “was there a choice offered to the consumer” or “was the consumer permitted to vary the terms or were they standard terms”

Timeshare is invidious and incestuous and on a lot of occasions transactions are not at an arm’s length and stiffed.

Posted on: 5th June 2015