Please explain what competent means regarding the requirement that an agreement be between competent parties in order for a contract to be effective?
The law generally presumes that everyone has the capacity to contract. But if a party does lack capacity, then the contract is usually voidable and the party without capacity may avoid the contract. Parties to an agreement must have contractual capacity before the agreement will be binding on both parties. Contractual capacity is the ability to understand that a contract is being made and to understand its general nature. The fact that a person fails to completely understand the full meaning and all ramifications of a contract does not mean that the person lacks contractual capacity.
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