Who qualifies as a competent party in a contract?

A competent party in a contract is someone who possesses the legal capacity to enter into a binding agreement. This generally means that the individual must be of legal age, which typically is 18 years or older, and must have the mental capacity to understand the nature and effect of the contract they are entering into.

Therefore, the option that describes someone who is mentally stable and of legal age accurately reflects the criteria for being a competent party. This ensures that the person can appreciate the consequences of their actions and make informed decisions.

Other options do not meet the legal criteria for competency. Minors typically lack the capacity to be bound by contracts unless they are for necessary items. An individual who is intoxicated at the time of signing may not fully understand the contract and its implications. Lastly, being declared bankrupt does not automatically affect an individual's capacity to contract unless specific legal limitations have been put in place. Thus, understanding these nuances helps clarify why the correct answer emphasizes mental stability and legal age as the basis for contractual competency.