The ability to understand the nature and effects of one’s actions. When a party to a contract is deemed to lack the capacity to enter into a binding contract, that contract is void or voidable. Related entries Privy Privity Whitten v. Greeley-Shaw Earle v. Angell Charitable Subscription Congregation Kadimah Toras-Moshe v. DeLeo Hurley v. Eddingfield Parol Evidence Rule Ray v. William G. Eurice & Bros., Inc. Leonard v. Pepsico, Inc.