1LAW101Law, Business & SocietyWeek 8Contract Law-Making contracts Part 3ContractsBASIC ELEMENTS OF CONTRACT FORMATIONContractsThen, TEST FOR VALIDITYCAPACITYThe law holds that some individuals lack capacity to contract. This is primarily for two reasons:1. Protect Individuals2. Protect SocietyCAPACITYDo the parties to the contract have full contractual capacity?–Only normal, sane, sober, adult person has FULL capacity to make a contract.–Means that they have the ability to understand what it is that they are entering into.CAPACITYDo the parties to the contract have full contractual capacity?–Under common law and (in some states statute law) classes of people are treated as NOT having full contractual capacity which affects the VALIDITY of any contracts entered into by those persons.
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