Under capacity, which item represents a lack of legal capacity to contract?

• A. intoxication and insanity
• B. Incorporated companies
• C. Foreigners and illiterates
• D. Infant (under 19)

Answer: (D)

Legal capacity to contract means the ability to enter into a binding agreement with an understanding of its terms and consequences. An infant, meaning someone under 19 in this context, generally lacks full legal capacity to contract; contracts entered into by a minor are typically voidable at the minor’s option (with some exceptions, such as for necessaries). That’s why this option best represents a lack of capacity.

Intoxication or insanity can affect capacity and may render a contract voidable if the person couldn’t understand the transaction at the time. Incorporated companies are separate legal persons and have broad capacity to contract. Foreigners and illiterates can contract too, though there may be protections or formalities to ensure understanding.