In law, capacity refers to the ability of an individual to understand the facts of a situation, evaluate the alternative options and the implications of each course of action, make an informed choice and communicate their decision. Minors and those impaired by illness or inebriation may not have capacity to make choices on their own behalf and so cannot legally enter into agreements on their own. Capacity also refers to the attribute of an organisation to meet a particular challenge. If the organisation needs to cut its external spend by 10%, but most of the managers are competent in cost control but not cost reduction, then the organisation does not have the capacity to achieve its goal. See also Capability, and Competence.