In Guam, what is the legal term for the ability to form a contract?

In the context of contract law, the term that refers to the ability of an individual to enter into a legally binding agreement is "capacity." This concept specifically addresses whether a person has the legal competency to enter into a contract, which generally involves being of a certain age (usually 18 years or older) and having sufficient mental ability to understand the terms and consequences of the contract.

If an individual lacks capacity—due to reasons such as being a minor, having a mental disability, or being intoxicated—the contract may be considered voidable or even invalid. Therefore, the notion of capacity is critical in determining whether a contract can be enforced against an individual. Understanding this principle helps ensure that parties are aware of their rights and obligations when entering into agreements. This is why "capacity" is the correct term that specifically addresses the legal ability to form a contract.