Honestly, don't you find it slightly odd that this client has had an excellent relationship with me in the past until the day I couldn't continue to work on the project due to limited timeframe which this client was very aware of? As much as this client want to spread misinformation, I assure you this was not a breach of contract but more of "personally offended."

I treat all of my clients very fairly but this one was just too out of this world. I don't appreciate it when one start threatening a law suit just to scare others, especially without a solid case to back him/her up.

My off-the-cuff response would be:

We didn't have an "excellent relationship" with Adam - he'd previously breached an understanding (and etiquette and common sense) by releasing the name and icons of a software project we'd not yet released or announced. Then he disappeared for a year when FSS needed MailDrop 2.0 icons to play World of Warcraft. But Adam typically does good work, so we hired him again.

The time frame was completely under Adam's control, and Adam had several weeks to complete a project that didn't even reach $1000. We (Brad and I) did not in any way, shape, or form agree to a half-done job or to a time constraint. Our feedback on icons was supplied to Adam within 24 hours each time.

Furthermore, again, I never once threatened a lawsuit. In fact, as mentioned above, I told Adam that he had that option if he felt he should be paid for breaching the agreement. So who is truly spreading misinformation?