Which of the following best defines capacity in contract law?

• A. The money offered to buy the property.
• B. The legal ability to enter into a contract.
• C. The date of closing.
• D. The property condition.

Answer: (B)

Capacity in contract law means the legal ability to enter into a binding agreement. It implies that a person understands the nature and consequences of the contract and has the mental competence to consent to its terms. In Nova Scotia, this includes being of the age of majority (19), and not lacking mental capacity or being so intoxicated that understanding is impaired. If someone lacks capacity at the time the contract is formed, the agreement can be void or voidable, depending on the circumstances. The other factors like the amount offered, closing date, or property condition don’t define capacity; they concern terms or timing, not the party’s ability to contract.