Which of the following describes "capacity" in contract law?

Prepare for the Texas Contract Law Exam. Study with engaging multiple choice questions, each with explanations. Get ready to excel in your Texas Contract Law Exam!

In contract law, "capacity" refers specifically to the legal ability of an individual or entity to enter into a binding contract. This concept is crucial because all parties involved in a contract must have the legal authority and mental competence to understand and agree to the terms of the contract for it to be enforceable.

Individuals lacking capacity may include minors, people with certain cognitive impairments, or those under the influence of substances, as these factors can hinder their ability to comprehend and consent to the contractual obligations fully. Therefore, establishing the capacity of the parties is essential for the validity of the contract.

The other options illustrate different aspects of contract law but do not correctly define capacity. The obligation to fulfill contract terms relates to performance, while the enforcement of contracts by the court pertains to remedies available for breach. The requirement of written documentation concerns formalities related to certain types of contracts, not the fundamental ability to contract.

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