What does the term "capacity" refer to in the context of minors and contracts?

In the context of minors and contracts, the term "capacity" specifically refers to the legal ability of individuals to enter into binding agreements. Generally, minors—typically defined as individuals under the age of 18—are considered to lack the capacity to form enforceable contracts. This principle exists to protect minors from being held to agreements that they may not fully understand due to their age and maturity level.

As a result, most contracts entered into by minors are voidable, meaning that the minor can choose to affirm or void the contract upon reaching the age of majority or even before that. This legal framework recognizes that minors may not yet possess the necessary judgment or experience to understand the implications of their contractual obligations fully. This protection helps ensure that they are not taken advantage of in legal agreements. Thus, the correct understanding of "capacity" in this context is that minors generally lack the legal ability to form enforceable contracts.