In terms of contract capacity, which entity has capacity?

• A. Foreigners and illiterates have capacity
• B. Incorporated companies have capacity
• C. Infants have capacity
• D. Intoxication has no effect on capacity

Answer: (B)

Contract capacity is about who can enter into a binding contract. An incorporated company is a separate legal entity created by statute, and it has the power to contract in its own name through its authorized officers. This capacity comes from its legal status, allowing it to bind itself in deals like property transactions, leases, or loans regardless of the personal capacity of its owners or members. The other ideas are not correct because minors generally cannot contract (with some exceptions), intoxication can render a contract voidable if the party wasn’t able to understand the transaction, and illiteracy does not automatically remove capacity (foreigners can contract as long as they meet age and mental competency requirements). Thus, incorporated companies have capacity.