What is the term for a transaction among parties, each acting in his or her best interest?

The term that describes a transaction among parties, each acting in his or her best interest, is an "Arms Length Transaction." In this context, an arms-length transaction ensures that the parties involved are acting independently without any relationship to each other that might create a conflict of interest. It emphasizes that both sides are negotiating from positions of equal bargaining power and are fully aware of the implications of the transaction. This principle helps to ensure fairness and transparency in the dealings, often resulting in a more accurate and just outcome.

Other terms like agency transaction refer to situations where one party acts on behalf of another, which can create an inherent conflict of interest. Fair market transaction and equitable transaction also do not encapsulate the idea of independent decision-making based on self-interest as strongly as arms-length transactions do. Therefore, understanding the characteristics of an arms-length transaction is crucial in real estate and financial dealings, as it promotes trust and integrity in the marketplace.