
I'm afraid if you have only said they must adhere to assured breeder scheme and if they have done that, they have filled what you note in the contract so you are kind of wrong in not lifting the endorsements. Does your contract say you must approve the selected partners/breeders that are to use him?
Have you asked them why they are so keen for him to be used? Do they want a puppy by him? You say they are first time pedigree dog owners, they must be thrilled of people asking to use him and by the third time of you refusing to lift because of the bitch/breeder, they probably feel a bit miffed and that you are just not lifting for the sake of it. They obviously do not know the ins and outs of the world in the breed - they need a mentor and as a breeder of the boy, you could have taken that position?
Is he of quality and lines that would benefit the breed? If you were to help them in finding the right type of breeder/bitch? It's obviously too late to work with them about this now but maybe they actually wanted to take their first steps in to world of the breed and are just green and in need of mentoring by somebody with experience...
In the end they have made the effort of showing him and he has done well to prove himself? They have health tested him? And as you know of the people wanting to use him, they have not just gone for pet people round the corner or somebody in the park asking to use him.
If I was them and had fulfilled what was asked and been in touch about bitches etc I would probably be a bit upset, not sure I would go as far as threatening with court, but would definitely feel let down.
They are green so probably do not understand the real reasons you are refusing to lift; the wrong type of breeders, the effort you have put in your lines over the years and not wanting them used/got by that type of breeder, the risk of your lines flooding the breed in hands of that kind of breeder etc.