Legal Capacity

In one sentence

The legal and mental ability to enter into a binding contract.

Plain English

Legal capacity means you have the legal right and mental ability to make a contract. Most adults have capacity, but minors, people with severe mental illness, and people under the influence of drugs or alcohol may lack it. If you lack capacity, any contract you sign is voidable—the other party can't hold you to it. Capacity is about whether the law recognizes you as able to make binding decisions.

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Example

A person with advanced dementia signs a contract to sell their house for far below market value. They likely lacked legal capacity due to their mental condition, so the contract is voidable and can be canceled.

Used in a sentence

“The court found that the defendant lacked legal capacity to enter into the contract due to mental incapacity.”

Related terms

Voidable

A contract that is valid unless and until one party chooses to cancel it.

Minor

A person who has not reached the legal age of adulthood, usually 18.

Mental Incapacity

Lacking the mental ability to understand a contract's nature, terms, or consequences.

Void

A contract that is invalid from the start and has no legal effect whatsoever.

Ratification

Accepting and confirming a contract or action, usually one that was previously invalid or unauthorized.

Offer

A proposal to enter into a binding agreement on specific terms.

Acceptance

Agreeing to the exact terms of an offer, creating a binding contract.

Consideration

Something of value exchanged by each party to make a contract binding.

This page is a plain-English reference and is not legal advice. Laws vary by jurisdiction and change over time. For specific situations consult a licensed attorney.