Sec. 112. General Rule

A contract operates to confer upon the parties, and only upon the parties, rights and obligations according to its tenor.

We have discussed the formation of the contract, and its interpretation. Now we shall consider its operation.

We may state the general rule as to its operation in a few words. A contract operates to confer upon the parties to it, and only upon them, rights and obligations as provided in the contract. No other person can be bound by the contract or assert rights upon it. To this general rule there are notable exceptions. They are noticed in the following chapters.

How the contract operates as far as its terms are concerned, we necessarily consider in the subjects of formation of contract, construction of contract, and discharge of contract. Hence, no separate consideration is necessary here.