MANAGEMENT

Detailed explanation-1: -Capacity to contract means the person or business you are contracting with has the legal ability to enter into a contractual relationship with you. Capacity depends on whether you are contracting with: A corporation. An individual acting in a particular role, such as a trustee.

Detailed explanation-2: -A company can enter into a contract to conduct business on its behalf. Since the company is not the trustee of its shareholders, the shareholders cannot enforce the contracts entered into by the company because he is neither a party to the contract nor entitled to any benefit from it.

Detailed explanation-3: -The law requires that a party to a contract has capacity to enter a contract. This means that the person is recognised in law as being able to commit to a contract. Most people and companies have capacity and so in the vast majority of contracts this is not a problem.

Detailed explanation-4: - Contractual Capacity: The minimum mental capacity required by law for a party who enters into a contractual agreement to be bound by it.