In a contract, what does "capacity" require from the parties involved?

The concept of "capacity" in contract law pertains to the legal ability of the parties entering into a contract. Specifically, it requires that the parties involved must be of legal age and possess sound mental capacity. Legal age generally refers to individuals who have reached the age of majority, which is typically 18 years in most jurisdictions. This ensures that individuals can understand and appreciate the consequences of their contractual commitments.

Additionally, being of sound mind means that the parties are mentally competent and can comprehend the nature of the agreement they are entering into. This protects vulnerable individuals, such as minors or those with mental disabilities, from being taken advantage of in contractual arrangements.

The other options do not accurately reflect the requirements of capacity in contract law. Financial capability, the requirement for at least one party to be a business entity, and the necessity of a witness are not standard elements of capacity. Instead, capacity focuses on age and mental competence, making option B the correct answer.