How Courts Assess Lack of Capacity Claims

A lack of capacity claim arises where a person is alleged not to have had the necessary mental ability to make a valid legal decision at the time they entered into a transaction, made a will, or gave instructions to a lawyer or other professional. English law recognises that capacity to make decisions is fundamental to fairness, and where someone genuinely lacks capacity, the law provides ways to challenge the validity of legal acts and to protect that person's interests. This article explains how courts assess lack of capacity claims, the applicable legal tests, key processes and evidence, and practical considerations for claimants and respondents in disputes.

Understanding Capacity: Legal Framework

In England and Wales, the starting point for most capacity disputes is the Mental Capacity Act 2005 (MCA), which provides the statutory framework for assessing whether an adult (aged 16 or over) has the mental capacity to make a particular decision. The Act applies to a wide range of decisions, including financial management, health and welfare, and the conduct of litigation. 

Core Principles of the Mental Capacity Act 2005

The MCA sets out five statutory principles that shape how capacity assessments should be approached:

1. Presumption of capacity – everyone is assumed to have capacity unless it is proved otherwise. 
2. Support to enable decision‑making – a person should be given all practicable help before being considered unable to decide. 
3. Unwise decisions alone do not prove incapacity – making a poor or eccentric decision does not, by itself, mean someone lacks capacity. 
4. Best interests rule – if a person lacks capacity, any decision or action for them must be in their best interests. 
5. Least restrictive option – actions should limit an incapacitated person's rights and freedoms as little as possible. 

Legal Test for Capacity Under the MCA

The MCA sets a functional test of capacity that applies to most decisions:

• Understanding – the person must be able to understand information relevant to the decision.
• Retention – they must be able to retain that information long enough to make the decision.
• Use and weighing – they must be able to use or weigh the information as part of deciding.
• Communication – they must be able to communicate their decision in any form (speech, sign, signal).
• Cause of incapacity – the inability to make the decision must be due to an impairment or disturbance in the functioning of the mind or brain. 

If the person cannot show these abilities in relation to a specific decision at a specific time, they lack capacity for that decision. Capacity is both decision‑specific and time‑specific: someone may have capacity to make simple decisions but lack capacity to make complex or high‑risk decisions. 

Common Law Capacity Tests: Wills and Lifetime Gifts

For certain matters, especially contesting wills, English law applies a separate common law test rather than the MCA.

Testamentary Capacity: Banks v Goodfellow

The leading test for whether someone had capacity to make a will is established in Banks v Goodfellow (1870), a long‑standing common law authority. Under this test, the court will consider whether, at the time the will was executed:

1. The testator understood the nature and effect of making a will.
2. They understood the extent of their property.
3. They could comprehend and appreciate the claims of people who might reasonably expect to benefit.
4. They were not influenced by a mental disorder that affected their dispositions. 

This test remains the authoritative standard for testamentary capacity, even in the context of the MCA, although courts may use the MCA framework as a cross‑check to help structure evidence. 

Capacity in Contract Law

Capacity issues also arise in contract disputes when one party claims they lacked mental capacity when entering into an agreement. Under English law:

• Every person is generally presumed to have capacity to contract.
• A contract made by someone lacking mental capacity may be voidable if the person demonstrates that:
  1. They did not understand what they were doing because of their lack of capacity, and
  2. The other party knew (or should reasonably have known) of the incapacity. 

Case law also recognises practical protections: for example, where a contract involves necessaries (goods or services essential for daily life), the incapacitated party may still be liable for a reasonable price even if the contract is not enforceable. 

How Courts Assess Lack of Capacity Claims

When a lack of capacity claim is brought before a court, the assessment involves:

1. Starting from a Presumption of Capacity

The court begins with the assumption that the person had capacity. The person asserting lack of capacity carries the burden of proof on the balance of probabilities that the individual did not have the required mental ability at the relevant time. 

2. Reviewing Evidence

Courts examine all relevant evidence to decide whether the statutory or common law test has been met. Types of evidence include:

• Medical and psychiatric records showing conditions such as dementia, brain injury, severe mental illness or cognitive impairment.
• Witness testimony from family, carers, professionals, or solicitors present during the decision‑making.
• Documents or contemporaneous notes demonstrating understanding or confusion.
• Expert reports from clinicians with expertise in mental capacity issues. 

The quality and quantity of evidence matter; retrospective assessments (after the decision has been made) are often contested and require careful evaluation.

3. Decision‑Specific Analysis

The court will focus on whether the person had capacity for the particular decision at the specific time in question. For example, someone might be capable of everyday choices yet lack capacity for complex financial or legal decisions. Capacity is not a global label but must be tailored to the decision. 

Court of Protection Involvement

Disputes about capacity that arise during ongoing legal proceedings or that involve managing someone's affairs may be referred to the Court of Protection. This specialist superior court decides whether a person lacks capacity to make certain decisions and, if so, can appoint deputies or make determinations in that person's best interests. 

In litigation, if a party cannot conduct proceedings because they lack capacity, the court may appoint a litigation friend to represent their interests. 

Practical Considerations

Time and Evidence

Timely assessments and documentation can be vital. If a challenge is based on capacity at a past date, gathering evidence promptly, including medical records and witness statements, helps courts form a reliable picture of the individual's mental state.

Decision‑Specific Support

Practitioners should explore whether support or accommodations could enable someone to make their own decision before concluding incapacity. The MCA emphasises providing all practicable help first. 

Risk of Disputes

Claims about capacity often arise in contexts such as wills, property transactions and contracts with significant financial implications. These disputes can be factually and legally complex, and outcomes often turn on detailed evidence and careful application of the legal principles outlined above.

Key Takeaways

Courts in England and Wales assess lack of capacity claims by applying structured legal tests grounded in the Mental Capacity Act 2005 and, for certain matters like wills, established common law standards such as Banks v Goodfellow. The process begins with a presumption of capacity and focuses on whether the person genuinely had the mental ability to understand, retain and weigh relevant information at the time of the decision. Case‑specific evidence, medical records and judicial discretion are central to the outcome. Proper assessment and documentation are essential, and where lack of capacity is shown, transactions may be set aside, or decisions may be made on behalf of the individual in their best interests.

James William Steven Parker

James is the founder of UKLegalGuides.com and a former agent at the Ministry of Justice (UK). With a background in processing legal claims, he launched this platform to make the laws of England and Wales accessible to everyone.