Which term refers to a contract that is not legally recognized due to one party's lack of capacity?

A contract that is deemed not legally recognized due to one party's lack of capacity is referred to as a void contract. This term indicates that the contract lacks legal effect from the moment it is created. Instances that might lead to a contract being void include situations where one party is a minor, mentally incapacitated, or under the influence of substances, rendering them unable to understand the nature and consequences of the agreement.

In contrast, a voidable contract is one that remains valid until one party chooses to void it due to certain conditions, such as misrepresentation or undue influence. An unenforceable contract, on the other hand, is valid but cannot be enforced in a court of law for reasons other than the lack of capacity, such as failure to comply with the statute of frauds. An implied contract arises from the actions or conduct of the parties involved rather than from a written or spoken agreement.

Therefore, the recognition of a contract as void is specifically tied to incapacity issues, which is why it is the appropriate term in this context.