Definition: Competent parties have the legal capacity required to enter a binding contract. Capacity concerns legal ability, including relevant age and mental-capacity rules.
Example
An adult who has the required capacity can enter a purchase agreement; a difficult negotiation does not by itself show incapacity.
Keep the distinction clear
Capacity is different from financial qualification, business experience, or being a skilled negotiator. The effect of missing capacity depends on the facts and applicable law.
Related terms
Contract · Valid Contract · Voidable Contract
Keep studying
Valid, Void, Voidable, and Unenforceable Contracts
References: Cornell LII: capacity
Pronunciation (US): KOM-puh-tuhnt PAR-teez (capitals show stress)
Pronunciation reference: Merriam-Webster
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