Distinction and difference between the capacity to contract and authority to contract

Capacity to contract means power to bind oneself by the contract and authority to contract means the authority to bind another by the contract. Capacity is part of law of status, while the authority is part of law of principal and agent. Contracts made by agents and representatives, who have no authority from their principal to make them are not void, but merely voidable and may be ratified. They bind the agents and representatives in any case, if not adopted or ratified by their principal. Thus, if guardians on behalf of minors entered into contracts for their minor wards, such contracts would not bind the minors unless and until they adopted or ratified the same on becoming majors. However, such contracts are always binding on the guardians who made those contracts on behalf of their minor wards.

Categories: CIVIL