Capacity is the basis of informed consent. Patients have medical decision-making capacity if they can demonstrate understanding of the situation, appreciation of the consequences of their decision, and reasoning in their thought process, and if they can communicate their wishes.

Capacity is something of a legal term of art, but the determination of whether an individual has the capacity or competence to consent to health care is made by health care professionals. Competence means having sufficient knowledge, judgment, skill, or strength to perform a given task.

In a medical context, capacity refers to the ability to utilize information about an illness and proposed treatment options to make a choice that is congruent with one's own values and preferences. Capacity is defined around a specific medical decision; individuals may have capacity in one clinical context but not in another and vice versa.