R2d § 12
Capacity to Contract
(1) No one can be bound by contract who has not legal capacity to incur at least voidable contractual duties. Capacity to contract may be partial and its existence in respect of a particular transaction may depend upon the nature of the transaction or upon other circumstances. (2) A natural person who manifests assent to a transaction has full legal capacity to incur contractual duties thereby unless he is (a) under guardianship, or (b) an infant, or (c) mentally ill or defective, or (d) intoxicated.
Professor's notes
Elements: (1) no one can be bound by contract who has not legal capacity to incur at least voidable contractual duties; (2) a natural person who manifests assent has full legal capacity unless he is (a) under guardianship; (b) an infant; (c) mentally ill or defective; (d) intoxicated.
This is the gateway provision for the capacity defenses. Each category has its own section (§ 14 infancy, § 15 mental illness, § 16 intoxication).
Common misunderstanding: students think "voidable" means "void." Capacity-defective contracts are typically VOIDABLE at the option of the incapacitated party: not automatically void. The other party is bound; the incapacitated party may affirm or disaffirm. The asymmetry is the doctrinal point.
Text
R2d § 12. Capacity to Contract.
(1) No one can be bound by contract who has not legal capacity to incur at least voidable contractual duties. Capacity to contract may be partial and its existence in respect of a particular transaction may depend upon the nature of the transaction or upon other circumstances.
(2) A natural person who manifests assent to a transaction has full legal capacity to incur contractual duties thereby unless he is
(a) under guardianship, or
(b) an infant, or
(c) mentally ill or defective, or
(d) intoxicated.