No, a breach by one party does not relieve the other party of their obligations
If the contractor is contractually obliged to hand over the IP then they have to do so or breach the contract. The fact that the other party may (or may not) be in breach doesn't change that. The remedy for a breach of contract is damages, not a relief of obligations.
A sufficiently egregious breach may allow the aggrieved party to legally terminate the contract which ends all future obligations. However, termination is highly technical and easy to get wrong - if you purport to terminate a contract when you do not legally have the right to do so then you have just breached the contract and exposed yourself to damages.
Failure to pay on time is generally not a breach that allows termination. Your legally correct course of action is to sue for the money and continue to fulfill your legal obligations under the contract. Its worth noting that the legally correct actions may be commercial suicide and the correct commercial decision may be to breach the contract.