How Much Do You Know About Legal Capacity?

Legal Capacity: A Summary

• Legal capacity refers to a person's ability to have rights and liabilities, or legal personality, in relation to an entity other than a natural person.
• Capacity covers both day-to-day and life-changing decisions, and the state has a role as a protector of vulnerable members of society.
• Standardized classes of people have had their freedom restricted, but many of the older incapacities have been removed as societies have developed more equal treatment based on gender, race, and ethnicity.
• Minors have varying legal rights and responsibilities depending on their jurisdiction, including the right to disaffirm a contract made while under 18.
• Bankruptcy affects a person's creditworthiness and capacity to enter into contracts, but after discharge, they are returned to full capacity.
• During times of war or civil strife, a state will limit the ability of its citizens to offer help or assistance to those who are acting against the interests of the state.
• Loss of mental capacity may occur due to an inherent physical condition or illness, and agreements made by a person in such a state may be voidable.
• The UK's Mental Capacity Act 2005 sets out a two-stage test of capacity, and all matters concerning persons who have lost mental capacity are regulated under this act.
• Trade unions have limited capacity unless any contract made relates to union activities.
• When a business entity becomes insolvent, an administrator, receiver, or other similar legal functionary may be appointed to determine the entity's future.
• The extent of an entity's capacity depends on the law of the place of incorporation and the enabling provisions included in the constitutive documents of incorporation.
• The law does not generally allow any defense or excuse to be raised to any actions taken while incapacitated due to self-induced intoxication.