What is meant by "legal capacity" in the context of contracts?

"Legal capacity" refers specifically to the ability to enter into a contract. This concept ensures that the parties involved possess the necessary mental and legal qualifications to understand the nature and consequences of their contractual obligations. To have legal capacity, individuals must generally be of a certain age (usually 18 years or older), not be mentally incapacitated, and not be under the influence of substances that could impair judgment.

Individuals who lack legal capacity, such as minors or those deemed mentally incompetent, are generally not able to form valid contracts, which is an essential principle in contract law. This protects vulnerable parties from being taken advantage of and upholds the integrity of contractual agreements.

While comprehension of legal language, negotiation skills, and the ability to work with legal counsel are important aspects of engaging in contracts, they do not directly define "legal capacity." Legal capacity is fundamentally about whether a person can legally consent to the formation of an agreement.