Can MOU can be cancelled at the time of payment?

We are service providers and have done MOU with an Institute regarding organizing some events during their annual fest. Few events were free from our side and few were paid according to MOU done. The MOU says that it can only be cancelled if company fails to conduct event or get bad reviews from participants. The events were fabulous and we got 100% positive feedback from students. But during one event our trainer went to other event during the same fest and had a heated conversation with the event organizer because he was mis-behaving with one of the lady in that fest. That moment they didn't informed the company about this act and now they have sent us a letter stating about the cancellation of the MOU and they will defame us in other colleges as well due to this happening. Now the point is our trainer did something that was totally correct and into his personal ability. The company did not told him to do such things. Can they cancel the MOU after the events are completed and payment is due on their side because of another side event thats not mentioned in MOU? Moreover is it legal to threaten us by saying that they will publically defame us on social media? Our payment is due from their end, what should we do in this situation Please suggest!