Business Law and the Legal Environment: "Chapter 10, Section 4: Capacity"

Read this section, which discusses the issue of legal capacity to contract. Capacity relates to a party's ability to understand the nature and effect of his or her actions. If a party lacks capacity to contract, he or she has the option to void the agreement. For this reason, most businesses are reluctant to enter into contracts with minors, because by law, minors lack capacity.