What Is legal capacity?

If an individual's actions cannot be held accountable under the law, because they meet some criteria of incompetence, we say they do not possess the legal capacity to enter into legally binding agreements. We'll explore the criteria below.

Without legal capacity, legal agreements cannot be upheld. In most jurisdictions, legal capacity is presumed for adults who have reached the age of majority (typically 18 years old) and who are of sound mind. Without legal capacity, any agreements or decisions made by an individual may be considered void or voidable, meaning they may not be legally enforceable.

Factors affecting legal capacity

Several factors can affect an individual’s legal capacity:Age: Individuals under the age of majority are generally considered minors and may have limited capacity to enter into contracts.

1. Mental competency: Mental illness or cognitive impairment can affect an individual’s ability to understand the nature and consequences of their actions.

2. Intoxication: Being under the influence of alcohol or drugs at the time of entering a contract may impair legal capacity.

3. Legal restrictions: Court orders declaring an individual legally incompetent, or certain legal statuses like bankruptcy or criminal convictions, can impose limitations on a person’s capacity.

How do you determine legal capacity?

Determining legal capacity involves assessing whether an individual understands the terms, conditions, and implications of an agreement or decision. A key consideration includes their mental state. If an individual is not of 'sound mind', in a state of duress or undue influencer, it makes sense that we cannot always ascribe the consequences of their actions to the decisions they made. Age or medical (including mental) conditions also play a role. Courts determine whether any of these criteria are met through rigorous questioning of the parties, researching, and verifying the evidence presented in the case.

Aside from this, external factors like intoxication or language barriers should be considered, as they can impair judgment and understanding. Whilst it does not necessarily absolve an individual of wrongdoing, it can have implications for the way that their actions are considered by the courts, as interpreting intent plays a critical role in final judgement.

When dealing with parties that may or may not meet some of the criteria above, uncertainties can arise. In such cases, it is advisable to consult a legal or medical professional. They should be able to interpret whether the counterparty is fit to enter into a legal agreement with you.