Contract Glossary
Legal Capacity
Definition
The legal ability of a person or entity to enter into a binding contract. Minors (under 18 in most states), people who are mentally incapacitated, and intoxicated individuals generally lack capacity. A contract signed without capacity can be voided.
In Practice
Before signing any contract, verify that the person signing has the authority to bind themselves or their organization. For businesses, check that the signatory is an authorized officer or has a power of attorney. For individuals, mental competency and age matter. A contract with a 16-year-old is voidable at the minor's discretion, they can walk away, but you can't.
Common in these contract types
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