Is the money that the farmer took from the merchant in exchange for workers' wages, after the merchant backed out of the purchase, considered unlawful for the farmer?

There is no blame on the farmer for what he took from the merchant as compensation for what he lost due to the agreement that took place between them. If the agreement was merely a promise to purchase and not a binding sale, then if the promisee suffered harm due to the breaking of the promise, he would have the right to compensation for this harm. A promise becomes judicially binding if it is contingent upon a cause and the promisee incurred expenses as a result of the promise. The effect of the obligation is determined either by fulfilling the promise or by compensating for the damage actually incurred due to the unfulfilled promise without excuse. However, if the agreement between them was a sales contract and not merely a promise, then what occurred between them afterwards is considered a rescission.