Business and Personal Finance Dictionary

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• CAPACITY OF PARTIES
  
  The legal ability of people or organizations to enter into a valid contract. A person entering into a contract will have full, limited or no capacity to contract. No capacity to contract: The inability of a person to enter into a valid contract under any circumstances. Such inability can arise when a person has been adjudicated insane or is an officer of a corporation who is not authorized to execute a contract in behalf of a corporation.
  
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