What is typically required for someone to have 'capacity' in entering a contract?

For someone to have 'capacity' when entering into a contract, it is fundamentally important that they possess an understanding of the contract terms. This understanding ensures that the individual is aware of the rights, obligations, and effects of the contract they are entering. Capacity refers to the legal ability to enter into a binding agreement, and without the requisite understanding, individuals may not be able to make informed choices or appreciate the consequences of their agreements.

While age requirements can be a factor in determining capacity—such as needing to be of a certain age to enter into contracts—understanding the terms is more critical because even someone of age may not have the capacity if they do not comprehend what they are agreeing to. Legal representation can assist individuals in understanding contracts but does not itself confer capacity. Government approval is not generally required for capacity unless specific regulations apply to certain contracts.

Thus, having a clear understanding of the contract terms is essential to affirm capacity and ensure that the individual can legally engage in the contractual process.