Chapter 18: Contractual Capacity and Genuine Assent Alan Moran, David Niese, Mark Schafer, Juan Camacho, Megan McLaughlin, Andrew Hansen Contractual Capacity Definition of Capacity When forming a contract, the ability to enforce that contract is contingent with multiple aspects of the contract. include the contract’s offer and acceptance, whether proper consideration has been given, the intention to create a contract, and legal capacity of the person signing the contract. Capacity is the ability to incur legal obligations and acquire legal rights (Mallor et al). These rights pertain to people who enter into legally binding contracts and may allow them to sue or be sued in their own name (BusinessDictionary.com). Sometimes, capacity can be obvious as in minority. At other times, it is subjective as in cases of mental capacity in which the court must determine whether capacity existed. It is important to note that even if both members entering into the contract would typically have capacity, no legal contract can be made for any tortuous, criminal, or anti-statutory agreement between them (Wiziq.com). Contractual capacity is intended to allow certain persons the ability to avoid or escape the conditions of a contract if they meet certain criteria. These requirements were created by law as a means of protecting certain individuals deemed unfit to have entered into that contract. In some instances, should the capacity of one or more of the contractually bound parties be impaired, they would have the option to void or enforce the contract, but would not be obligated to do so. This would be considered a voidable contract. There are other situations in which a person entering a contract has no option to execute or void the contract. In these cases, the contract is automatically void and cannot be executed. An example of a void contract would be a party adjudicated to be mentally incompetent, or if they were impaired to the extent that they could not possibly have given consent to the contract, such as being unconscious or under duress.
Chapter 18: Contractual Capacity and Genuine Assent Alan Moran, David Niese, Mark Schafer, Juan Camacho, Megan McLaughlin, Andrew Hansen Contractual Capacity Definition of Capacity When forming a contract, the ability to enforce that contract is contingent with multiple aspects of the contract. include the contract’s offer and acceptance, whether proper consideration has been given, the intention to create a contract, and legal capacity of the person signing the contract. Capacity is the ability to incur legal obligations and acquire legal rights (Mallor et al). These rights pertain to people who enter into legally binding contracts and may allow them to sue or be sued in their own name (BusinessDictionary.com). Sometimes, capacity can be obvious as in minority. At other times, it is subjective as in cases of mental capacity in which the court must determine whether capacity existed. It is important to note that even if both members entering into the contract would typically have capacity, no legal contract can be made for any tortuous, criminal, or anti-statutory agreement between them (Wiziq.com). Contractual capacity is intended to allow certain persons the ability to avoid or escape the conditions of a contract if they meet certain criteria. These requirements were created by law as a means of protecting certain individuals deemed unfit to have entered into that contract. In some instances, should the capacity of one or more of the contractually bound parties be impaired, they would have the option to void or enforce the contract, but would not be obligated to do so. This would be considered a voidable contract. There are other situations in which a person entering a contract has no option to execute or void the contract. In these cases, the contract is automatically void and cannot be executed. An example of a void contract would be a party adjudicated to be mentally incompetent, or if they were impaired to the extent that they could not possibly have given consent to the contract, such as being unconscious or under duress.
Ch-18-Contractual-Capacity.docx