Olson v. Etheridge

Bay v. Williams, 112 Ill. 91 (1884), established the rule in Illinois that the rights of a third-party beneficiary in a contract are subject to immediate vesting and, once vested, cannot be altered or extinguished through a later agreement of the contracting parties without the assent of the beneficiary. Bay, 112 Ill. at 96-97. We are here called upon to determine the continued validity of the Bay rule.

The four plaintiffs in this case are third-party beneficiaries of a promise contained in a contract entered into by the appellant and another party. The circuit court of Bureau County awarded…