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If he alleges breach of contract, it is up to him to show how and why.
You should ask him for evidence of the same.
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You have acted reasonably in that case as the client is in breach by not paying and you are within your rights to withhold services until payment is made.
You may make a claim online at www.moneyclaim.gov.uk if you wish to.
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You may argue that it is your policy that all arrears are settled by the client before you may continue work. You should also include provisions in your contract saying this.
Yes, a compromise would be good as I would advise going to court over this.
Sorry, I meant "I would not advise"...
You are welcome, good luck.