What is meant by the term "contractual capacity" in contract law?

The term "contractual capacity" refers to the legal ability of parties to enter into a contract. This capacity is fundamental to the validity of a contract, as it ensures that the individuals involved have the necessary mental competence and legal standing to understand the obligations they are agreeing to. To form a binding contract, parties must have the capacity to consent, meaning they are of legal age, not mentally incapacitated, and not under duress or coercion.

Understanding contractual capacity is crucial because if one party lacks the capacity, the contract may be considered void or voidable. This means that the person without capacity may be able to disaffirm the contract, highlighting the importance of ensuring all parties are capable of understanding and engaging in the agreement.

The other concepts, such as drafting a contract, the requirement of documentation, and fulfilling contractual terms, are related to contract processes and obligations but do not define contractual capacity itself.