A person who is beaten; the recipient of beating, as opposed to the one doing the beating.
From 'beat' (Old English 'beatan') plus '-ee' (a suffix borrowed from French meaning 'one who receives'), following the pattern of 'employee,' 'payee,' and 'addressee'.
The '-ee' suffix was rare in English until French-influenced legal and business language made it common—now it's so productive that we can add it to almost any verb (even 'attendee' for someone who attends), creating a neat grammatical pair with '-er'.
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