Capacity to Contract

Question 1

Defense of Lack of Capacity

Answer 1

A party may establish the defense of lack of capacity due to the party’s (1) infancy, (2) mental
illness or defect, or (3) intoxication at the time of the contract.

Question 2

Test of Competency

Answer 2

Is the person able to comprehend and understand the nature of the transaction?

Question 3

When can a contract be voided for lack of capacity?

Answer 3

(1) Person suffers lack of capacity event
(2) Party knows or has reason to know of lack of capacity
(3) Voiding the contract wouldn’t be inequitable to the other party.