Contractual capacity is required for both parties entering into a contract. Specifically, both parties must be mentally capable in order for the contract to be legally binding. If either party doesn't have the capacity, then the contract will not be enforceable.

What does it mean to have a contractual capacity?

���� Contractual Capacity: The minimum mental capacity required by law for a party who enters into a contractual agreement to be bound by it.

How do you establish contractual capacity?

Legal Capacity to Enter Into a Contract

Acceptance (the agreement by the other party to the offer presented) Consideration (the money or something of interest being exchanged between the parties) Capacity of the parties in terms of age and mental ability. Intent of both parties to carry out their promise.