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Olson v. Etheridge

Supreme Court of Illinois
686 N.E.2d 563 (1997)


Olson and others (plaintiffs) contracted to sell a John Deere dealership to Etheridge (defendant). Etheridge later sold half the dealership to Engelhaupt (defendant). Under that contract (Agreement II), Engelhaupt was to pay the plaintiffs to satisfy Etheridge’s debt under the sale contract. Engelhaupt and Etheridge then negotiated a third contract under which Engelhaupt would pay the remaining amount owed under Agreement II to Princeton Bank instead of the plaintiffs. Etheridge failed to pay the plaintiffs. The plaintiffs, as third-party beneficiaries of Agreement II, sued Etheridge and Engelhaupt. The Circuit Court of Bureau County entered summary judgment for the plaintiffs based on the rule set out in Bay v. Williams, 1 N.E. 340 (1884), that the rights of a third-party beneficiary cannot be changed or terminated without the beneficiary’s consent. The ruling was upheld on appeal. Engelhaupt appealed to the Supreme Court of Illinois.

Rule of Law


Holding and Reasoning (Bilandic, J.)

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