That's just it: I'm not twisting anything.
Example, Xykon clearly completes a sentence, then adds a parenthetical statement, claiming he is still speaking the same sentence. At that point the letter of the contract has been breached.
The modron does not cancel it's service agreement, but allows Xykon to flounder his way through. Why?
Because In his clumsy way Xykon is attempting to honor the contract. The modron accepts the spirit of the agreement above the letter of the agreement in this very specific incident. Why?
Holding a contractee to the letter of the contract is not automatically Lawful. A contract is an attempt to reach a meeting of the minds, and it is that meeting of the minds that is most important.
So long as Xykon tries, and so long as those attempts benefit the modron, it will not cancel its agreement. When the agreement is no longer beneficial, the modron may indeed use a technical violation as an excuse to terminate the contract. That won't be because it is Lawful and is therefore compelled to abide by the letter of the contract. (That's already been violated.) It will be because it is no longer benefitting from the contract.
I hope that is a better explanation of my point.
I don't know that arbitration is a thing in the spell used, but it would be funny to see another quinton show up to settle the dispute. My opinion is that the role of arbitrator (usually held by the DM) would fall to the author, and be abstracted as the universal laws of magic or something.
Redcloak could dismiss the spell at will. Absent a DM, I'm uncertain how the quinton can terminate its service for any perceived technical violation. Perhaps, after accepting service, the summoned being's service is voluntary?
But then, what if the Gated being's alignment is Chaotic and they don't feel like helping? What compels them to even pay lip service to honoring any agreement?
I stipulate that I've answered that already. It will honor the agreement only so long as it is beneficial to do so. A salad wouldn't even need a technical violation at that point.
So, again, it comes down to a meeting of minds. Are you getting what you contracted to get? Is your contract partner actively attempting to fulfill it's agreement? Is that effort producing the benefits in a sufficient quantity to justify continuing to abide by it?
The exact word only comes into play when one party is seeking a way to break or exploit the contract. Otherwise, intent rules.