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    Allandale Farm, Inc. vs. Koch - Breach of contract

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    Allandale Farm, Inc., employed Koch from 1988 through 1997 as the person in charge of farming. Koch was hired for "permanent employment," subject to his ability to make the farm profitable. His compensation included salary and the right to occupy a house located adjacent to the farm, and certain performance-related bonuses. On January 7, 1997, Allandale Farm terminated Koch's employment and offered him $10,000 in exchange for a general release of liability and specified services. The offer letter stated, 'Assuming you have vacated 278 Allandale Road by March 7, 1997 (leaving it in broom-clean condition), have completed the Farm's pesticide reports for 1996, returned to the Farm all the Farm's tools, equipment, field reports, and other records in your possession, the Farm will pay you on March 8, 1997, the sum of $10,000 . . . in exchange for a general release.

    This offer, of course, will be revoked in the event you commence any legal action against the Farm or any of its officers or directors.' Koch believed that he was owed more money, but he took no steps to begin legal action against the Farm at that time. On February 11, the January 7 offer was withdrawn. When Koch would not agree to the terms demanded by the Farm, the Farm sought an order for him to vacate the house. In a letter dated March 13, 1997, the Farm stated that he and his family could remain in the house for no charge until June 30, 1997. The Farm offered Koch $10,000 for his compliance with the terms of the letter, including a release of any claims relating to his termination.

    Koch did not accept the offer, but agreed to pay rent for his continued occupancy of the house so that he could keep his children in school. The Farm refused Koch's offer to pay rent and sued to evict him from the house. Still later, the Farm offered once more to extend Koch's occupancy if he would sign a general release, but he refused and instead vacated the house and filed a counterclaim against the Farm. In one count of this claim, Koch claimed that the Farm breached a contract to pay him $10,000.

    He asserts that the offer contained in the January 7 letter was wrongfully withdrawn before the expiration of time provided. Was a contract to pay the $10,000 formed between Koch and the Farm?

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    Solution Preview

    Breach of contract is a legal concept in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party's performance.

    Minor breaches
    A minor breach, a partial breach or an immaterial breach, occurs when the non-breaching party is unentitled to an order for performance of its obligations, but only to collect the actual amount of their damages. For example, suppose a homeowner hires a contractor to install new plumbing and insists that the pipes, which will ultimately be sealed behind the walls, are red. The contractor instead uses blue pipes that function just as well. Although the contractor breached the literal terms of the contract, the homeowner can only recover the amount of his ...

    Solution Summary

    A breach of contract for Allandale Farm, Inc is discussed. The contract to pay formed between Koch and the Farm is determined.