mental ability to make a rational decision (which includes the ability to perceive and appreciate all relevant facts). Capacity is not necessarily synonymous with sanity.
• To render a contractbinding, the parties must have the capacity to contract.
• Testamentary capacity with respect to personalty is governed by the law of the testator’s domicile.
• With respect to realty, on the other hand, capacity is governed by the law of the place where the realty is situated.
The objection of “lack of capacity to sue” refers to a general legal disability to maintain the action.
Congratulations! You're now Froogled Up™ on what "Capacity" means!
Feel free to use it throughout your financial/insurance life.