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In business law, a transaction is an event associated with business dealings conducted between two or more parties that involve the formation and performance of an obligation or contract. The word transaction is frequently used in real estate and mergers and acquisitions markets.

In civil law, the word transaction may be used to refer to an agreement (commonly written in the form of a contract) reached between two or more parties whereby they make reciprocal concessions to prevent or end a dispute that might end up in litigation. These types of agreements are also known as compromises or settlements.

See also: arm’s length transaction.

[Last updated in August of 2021 by the Wex Definitions Team]