My advice is before this goes any further down the track of who sues who, Jim and Bob need to have an urgent face-to-face meeting (or telephone call) to try and

My advice is before this goes any further down the track of who sues who, Jim and Bob need to have an urgent face-to-face meeting (or telephone call) to try and resolve this amicably rather than wasting their time and money involving lawyers. Don’t worry about what the contract says or doesn’t say – legal precedent picks up on what is left unwritten in contracts. Jim needs to work out a reasonable negotiating position (such as getting paid for the hours actually expended in exchange for handing over the work done to date) and not worry about things like consequential income losses, which are very difficult to recover at law. If after both parties have used their best efforts to resolve the disputes and there is still no agreement; then consult the lawyers.