Ability to Perform

Definition - What does Ability to Perform mean?

Ability to perform refers to a situation where two separate parities are capable of following through with their end of a contract that they both freely entered. Before entering into financial transactions with other people or entities, it is important to do research to determine whether the person or entity has the ability to perform on the transaction.

Justipedia explains Ability to Perform

In general, people or entities that have high credit ratings due to timely paying off their debt will have a higher ability to perform financial transactions that they have entered into. The best way to determine whether a person or entity has the ability to perform is to check their credit score. By doing this, you are able to see whether this person or entity has entered into financial transactions in the past and whether they paid their portion of the transaction in a timely manner.

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