_____ is the requirement that the party making the contract must be legally able to do so.

_____ is the requirement that the party making the contract must be legally able to do so.

• A. Capacity
• B. Authority
• C. Willingness
• D. Offer

Answer: (A)

Capacity means the legal ability to enter into a contract. It requires that the party signing the agreement understands what they are agreeing to and is legally permitted to bind themselves. This typically includes being of legal age and having the mental competence to understand the contract’s terms, and it also applies to entities, where a corporation or organization has capacity through its charter and existence. If capacity is lacking, the contract can be void or voidable because there isn’t a legally enforceable agreement. Other concepts are about different protections in contract formation: authority concerns whether someone has the power to bind the party for whom they act; willingness refers to the intent to enter into the contract; and an offer is the proposal to form a contract, not a statement about the contracting party’s own ability.

Capacity means the legal ability to enter into a contract. It requires that the party signing the agreement understands what they are agreeing to and is legally permitted to bind themselves. This typically includes being of legal age and having the mental competence to understand the contract’s terms, and it also applies to entities, where a corporation or organization has capacity through its charter and existence. If capacity is lacking, the contract can be void or voidable because there isn’t a legally enforceable agreement.

Other concepts are about different protections in contract formation: authority concerns whether someone has the power to bind the party for whom they act; willingness refers to the intent to enter into the contract; and an offer is the proposal to form a contract, not a statement about the contracting party’s own ability.