When he presented the bid to you both... did you look over it well, and the specifications, and not just looking at his bid price?
On it, his bid would not have included, the bookshelves. For example.
And, is this Contractor, a Sub-Contractor of the Architect? Or you found this guy on your own?
Many architectural firms, have sub-contractors they work with. For example.
He is going to refund the $1000 to you. But he is not building the seating for you, per his bid and the construction project. So, per the contract, what does it say about this? Sure, ALL of that was "supposed" to be a part of his bid and the job performed, per the bid specifications.
But, did you both, ALL, sign a contract? Or you just verbally accepted his bid?
A bid, is a proposal. Of which, it can or cannot be amended etc. It must be signed off on. And there are always things which may happen, on an actual construction site, that is unforeseen.. and may increase, the actual construction costs. What did his proposal say about this? It is called "CHANGE ORDERS."
Now, are those bookshelves, a custom, built-in unit? Of which the Architect designed it and it is a part of the construction? Or is this a separate unit type of bookshelves? ie: something you buy from a store and thus, the Architect specified it per the interior design of the room?
You need to see, what his bid proposal said, versus the contract and about how Change Orders are handled. Or omissions.
Bid proposals are an estimate and a proposal. And once all parties agree to the proposal, then it MAY become binding. But if the Contractor did not even start, the project... then, it MAY still be up for changes/amendments/re-negotiations or retracted before, full agreement by all parties.
Is this a General Contractor? Or just a construction guy who is working independently and this is his side job? Is he licensed? I assume so. Who is his, Boss? Or the firm he works for?
Is he, licensed? And bonded?
Then, do you have, a Contractor or Sub-Contractor Agreement?
And in either case, you need to see how change orders are handled.
But also, he said he will not do... the seating. Was his not doing it, in his bid?
And yes, Cabinetry contractors, are a different category of construction contractors. They charge differently. Each niche in construction and the sub-contractors, all have different ways they charge for a project. But, you do not HAVE to, have your Cabinetry guy, build your seating. That is your, choice, to have the cabinetry guy do your seating.
Now, since the Contractor said he will not build the seating, but he is refunding you the $1000 for it, what does the Contract say about reneging on a contract? Again, this goes back to "Change Orders."
And, do you have in hand, the $1000 the Contractor is supposed to give back to you? You might have to chase him down for that.
Sure, tell him. You take out the Contract you have with your contractor, sit him down, and you SHOW him and TELL him, that he is not upholding the contract. You can take him to small claims court etc.
BUT, also, you should have known and seen, in his bid or proposal... that the "bookshelves" were not in it. So this should not be a surprise.
Did this guy actually start, the project?
Or did you just say "we will hire you...." but did not hash out anything with him nor sign anything?
All bidders bid a project hoping they will get the job.
It does not mean, hiring the "cheapest" one is the best. Your budget, may not even fit.... the scope of what you want done. In the first place. Meaning, maybe what you want done/built in your home, is simply MORE than your budget. So there is budget, and then the reality of what it actually costs, on the low-end or high-end. Any Contractor also has to make a profit. They work. It is work.
And you always have to look at the change orders/contract/proposal/details and specifications/project management/fee schedule/project timelines etc.,... and/or going over it with your Architect. Because, laypeople do not typically understand construction proposals or contractor contracts. Did you see what your Architect thought about all this? That is one place to start.
And sure, you can take the guy to small claims court and/or get an Attorney.
Your Bidder bid on the "whole project." And who knows what method he used to come up with his estimate. But, you chose him because it "matched what we were willing and able to spend... we made it clear to him from the very beginning that we have a budget..." Fine. But did the bid or the proposal... also match... what needed to be done per the project/the construction drawings, too? And each one of those items, were addressed, in the bid proposal and itemized? ie: the bookshelves were in the construction drawings... but was it ALSO in the contractor's bid proposal? Or not? As you said, the contractor "left out" the bookshelves that were in the construction drawings. But you signed off on his proposal, despite?
What does the contract stipulate or not?