Arm's length principle in the context of "Fiduciary"

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⭐ Core Definition: Arm's length principle

The arm's length principle (ALP) is the condition or the fact that the parties of a transaction are independent and on an equal footing. Such a transaction is known as an "arm's-length transaction". It is used specifically in contract law to arrange an agreement that will stand up to legal scrutiny, even though the parties may have shared interests (e.g., employer-employee) or are too closely related to be seen as completely independent (e.g., the parties have familial ties).

An arm's length relationship is distinguished from a fiduciary relationship, where the parties are not on an equal footing, but rather, power and information asymmetries exist. It is also one of the key elements in international taxation as it allows an adequate allocation of profit taxation rights among countries that conclude double tax conventions, through transfer pricing, among each other. Transfer pricing and the arm's length principle were one of the focal points of the base erosion and profit shifting (BEPS) model developed by the OECD and endorsed by the G20.

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Arm's length principle in the context of Separation of church and state

The separation of church and state is a philosophical and jurisprudential concept for defining political distance in the relationship between religious organizations and the state. Conceptually, the term refers to the creation of a secular state (with or without legally explicit church-state separation) and to disestablishment, the changing of an existing, formal relationship between the church and the state. The concept originated among early Baptists in America. In 1644, Roger Williams, a Baptist minister and founder of the state of Rhode Island and the First Baptist Church in America, was the first public official to call for "a wall or hedge of separation" between "the wilderness of the world" and "the garden of the church." Although the concept is older, the exact phrase "separation of church and state" is derived from "wall of separation between Church & State," a term coined by Thomas Jefferson in his 1802 letter to members of the Danbury Baptist Association in the state of Connecticut. The concept was promoted by Enlightenment philosophers such as John Locke.

In a society, the degree of political separation between the church and the civil state is determined by the legal structures and prevalent legal views that define the proper relationship between organized religion and the state. The arm's length principle proposes a relationship wherein the two political entities interact as organizations each independent of the authority of the other. The strict application of the secular principle of laïcité is used in France. In contrast, societies such as Denmark and England maintain the constitutional recognition of an official state church; similarly, other countries have a policy of accommodationism, with religious symbols being present in the public square.

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