Capacity to Contract Law and Legal Definition

Capacity to contract means the legal competence of a person to enter into a valid contract. Usually the capacity to contract refers to the capacity to enter into a legal agreement and the competence to perform some act. The basic element to enter into a valid contract is that s/he much have a sound mind.

Certain class of people are exempted from the category of people who are capable of entering into contract:

1. infants/minors;

2. insane;

3. people under the influence of drug;

4. bankrupt;and

5. enemy alien.