Which definition aligns with legal capacity in the context of Texas contracts?

Legal capacity in the context of Texas contracts refers specifically to an individual's ability to understand the nature and effect of a contract. This means that a person must possess the mental ability to comprehend the terms and consequences of the agreement they are entering. Legal capacity ensures that all parties involved can make informed decisions, recognizing both their rights and obligations under the contract.

For a contract to be enforceable, both parties must have the legal capacity to engage in that contract. This typically includes being of a certain age (usually 18 years or older), not being mentally incapacitated, and not being under undue influence or duress. Understanding the nature and effect of a contract is essential, as it ensures that all parties are aware of what they are agreeing to, which upholds the integrity of contractual obligations in Texas law.