Legal Definitions - fair market price

Definition: Fair market price is the price at which a seller is willing to sell and a buyer is willing to buy a product or service in an open market and in an arm's-length transaction. It is the point where supply and demand meet.

Examples: If a person wants to sell their car and another person is willing to buy it for $10,000, then $10,000 is the fair market price. Similarly, if a company wants to sell its shares and investors are willing to buy them for $50 per share, then $50 is the fair market price.

Explanation: The examples illustrate that fair market price is the price that both parties agree upon in a transaction. It is not influenced by any external factors and is determined solely by the supply and demand of the product or service being sold.