Competent Parties

The law generally presumes that everyone has the capacity to contract.  But if a party does lack capacity, then the contract is usually voidable and the party without capacity may avoid the contract.

Parties to an agreement must have contractual capacity before the agreement will be binding on both parties.  Contractual capacity is the ability to understand that a contract is being made and to understand its general nature.  The fact that a person does not fully understand the full meaning and all ramifications of a contract does not mean that the person lacks contractual capacity.

Some classes of persons such as people under the age of 21, or in most states, under the age of 18, are deemed by law to lack contractual capacity. The common law rule was, and is, that anyone under the age of 21 years is a minor.  However, many states have reduced the age limit from 21 to 18 years.  Some states have the age of majority as 19.


Inside Competent Parties