Rights of Promisors and Promisees in Contracts

An error occurred trying to load this video.

Try refreshing the page, or contact customer support.

Coming up next: Contract Assignment: Definition and Involved Parties

You're on a roll. Keep up the good work!

Take Quiz Watch Next Lesson
Your next lesson will play in 10 seconds
  • 0:06 Promisor and Promisee…
  • 1:16 Third Party Beneficiary
  • 2:03 Consideration
  • 4:20 Lesson Summary
Save Save Save

Want to watch this again later?

Log in or sign up to add this lesson to a Custom Course.

Log in or Sign up

Speed Speed
Lesson Transcript
Instructor: Kat Kadian-Baumeyer

Kat has a Master of Science in Organizational Leadership and Management and teaches Business courses.

There are two parties to a contract, a promisor and a promisee. Each holds a responsibility to the contract but in different ways. As each role indicates, one party makes a promise, and the other party benefits from the promises made.

Promisor and Promisee in Contracts

There are two parties to a contract, and each plays a distinct role in the performance, or actions that complete the terms of a contract. The promisor makes a promise, and the promisee, in turn, has been promised something.

Let's use an example to simplify this. Suppose Misty was planning her 30th birthday bash. She may call a caterer to plan the menu. Then, no party is complete without a dancing gorilla. So, she books him too! When Misty called Grody's Dancing Gorillas, Inc. to book the boogying beast, Grody quoted Misty a price and promised to send his most talented gorilla, Mongo, to her party.

Grody is the promisor because he promised to send Mongo to dance at the party. Misty is the promisee because she is on the benefiting end of the promise. That is the simplified explanation of how two parties become obligated to one another. However, when contract law uses the terms 'promisor' and 'promisee,' they may also be referring to contracts that include a third party to which a benefit of the contract is owed.

The Third Party Beneficiary Rights

A third party beneficiary to a contract is one who benefits from a contract, but is not a named party to the contract. The promisor and the promisee act as the parties to the contract, but the third party actually receives that which was promised in the contract.

Each party has certain duties and rights to the contract. The promisor has the duty to provide what he promised in the contract. He also has the right not to be sued by both the promisee and the third party beneficiary. This means, if the promisor does not follow through on his promise, one party or the other may sue for performance but not both. It's sort of like the double jeopardy rule in criminal cases.

The promisee has the duty to perform the promises he made as well, like satisfying the element of consideration, or exchanging money or other valuable things to the promisor. The right to sue for non-performance is also a right of the promisee if performance is not satisfied. A third party beneficiary probably is in the best position in this type of contract. This party has no duties, but benefits wholly from the terms of the contract and has a right to sue for non-performance. This party cannot be sued for non-performance of the promisee either! It's a win-win!

Confused? Don't be! It's fairly simple to understand. Misty's grandfather wants to do something special for her 30th birthday. So, after researching many different gift ideas, Granddad Milo came across a neat present. He can name a star after Misty. Milo contracted with Star Gazers International to have a star named after Misty. He sent the payment of $30 to the company and waited patiently for the paperwork to be sent to Misty.

Unable to keep a secret, Granddad Milo spilled the beans about the star. Weeks passed since the promised arrival of the paperwork. Misty called the company to inquire where in the sky her star is located. The company denied owing her a star.

To unlock this lesson you must be a Study.com Member.
Create your account

Register to view this lesson

Are you a student or a teacher?

Unlock Your Education

See for yourself why 30 million people use Study.com

Become a Study.com member and start learning now.
Become a Member  Back
What teachers are saying about Study.com
Try it risk-free for 30 days

Earning College Credit

Did you know… We have over 200 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Create an account to start this course today
Try it risk-free for 30 days!
Create an account