The Capacity to Contract

June 4, 2008
Intellectual Property News and Interesting Facts

In order to enter into a contractual agreement both parties must be capable of doing so.

That is to say that both parties must be able to understand the terms of the contract into which they are entering, and the consequences of the promises that they make.

For example, animals, minor children, and mentally disabled people do not have the capacity to form a contract, and any contracts made with them will be considered by the law as being void.

Corporations are considered to be persons under the law, and so they are able to engage in contracts.