Answer:
Contractual capacity is defined by the law to mean the ability to understand the
consequences of a contract. This definition does not require that a person understand
the actual terms of the contract which may be written in technical legal terminology.
Nor does the definition require that the person have merely the actual understanding
of the terms whether expressed in legal terminology or not. Contractual capacity
requires only that she or he possess the ability to understand the consequences of
the terms.
There are two broad categories of parties that are recognized to lack the capacity:
1) Those who are said to be incapacitated and have special contractual rights due to a
legally recognized lack of such capacity. This group includes minors, the intoxicated, and
the mentally impaired.
2) The second category is made up of those who “lack the authority” to enter an agreement.
We will examine this group in the next lesson.
1. Incapacitated Parties - Minors
Incapacitated parties are assumed by the law to lack the maturity and experience to protect their
self-interests in contractual negotiations. The law grants these parties special contractual
protections designed to keep them from being cheated due to their lack of such contractual
capacity. Parties who have special contractual rights due to a legally recognized lack of such
capacity include minors, the intoxicated, and the mentally impaired.
Step-by-step explanation: