Definition: 

Contractual capacity is an individual’s faculty to sign binding contracts with

other parties either for himself or on behalf of a third party. It is a legal competence to
step into an agreement.
What Does Contractual Capacity Mean?
The faculty to sign contracts is a very delicate responsibility since it allows an individual
to commit himself, legally speaking, to many different situations that can have financial,
political or personal consequences. This is the reason why contractual capacity has its
boundaries and it can never be assumed if the nature of the contract is a complex one.

From a business standpoint, not all individuals within a company should be considered
fully capacitated to sign contracts on behalf of the business. This is the reason why
articles of association and other legal documents that sustain the business’ corporate
governance structure clearly define who has the capacity to legally commit the
company.

On the other hand, this faculty is also associated to the person’s well being at the
moment of the signature. Individuals with mental disabilities or severe psychological
impairments are normally considered unable to act on behalf of a third party and even
for themselves. Also, a fairly reasonable argument can be presented in court to rebuke
a binding agreement signed by a person under coercion.

Example
Perry is head of the Purchasing Department of a video production company. He is in
charge of buying everything required to stage filming procedures and he is also the
person in charge of keeping the office fully supplied. Recently, the company signed a
big filming project with a well-known music artist. Perry was involved in the negotiations
along with the CEO of the company, Marcus.

They were both present when the agreement clauses were drafted but a few days after
that the artist’s manager called Perry to say the contract was ready to be signed and he
scheduled the signing date for tomorrow. Even though Perry was present during the
negotiations he doesn’t have the contractual capacity to sign the deal. Marcus, the CEO
of the company, is the only one who has that faculty. Perry politely clarified the situation
to the agent and he called Marcus immediately to inform him about the signing.
We hear the term “criminal liability” a lot in the context of criminal law, but what does it
actually mean?
WHAT DOES CRIMINAL LIABILITY MEAN?
In simplest terms, when you are “criminally liable,” it means you may be held legally
responsible for breaking the law. This can be potential or actual responsibility—meaning
that you actually committed the crime, or that you are simply suspected of committing it.
If the liability is proven in court, you will be held responsible for the crime and sentenced
accordingly.
In cases of criminal liability, the government believes you may have committed a
criminal act, and the government prosecutes the case in court.
WHAT DETERMINES CRIMINAL LIABILITY?
In most cases (not all), criminal liability hinges on two elements: the actus reus (the
actual act or omission that violated the law) and the mens rea (the guilty state of mind,
the intention to commit).

In plain English, this means in order to prove that you are criminally liable, the
prosecution must prove “beyond a reasonable doubt” not only that you committed the
crime, but that you intended to do it. However, certain exceptions exist where “strict
liability” is enforced, meaning that you can be held liable for the crime regardless of your
intentions. For example, you may be convicted of selling alcohol to a minor whether or
not you knew the person’s age.
You can also be ticketed for speeding even though you didn’t know you were
exceeding the speed limit. Your experienced criminal defense attorney can advise
you on whether your alleged offense is a strict liability offense.