Thanks for the responses guys. We've only hired a contractor once before so I wasn't really too sure about this and was leaning towards not having to pay for the tool but wanted to be more sure before disputing it with the contractor.
This gets better though. He was cutting a rebar in cement and had to rent a tool to do so. He also needed to buy the blades which he said I'd have to pay for since he bought them for that only. I don't mind this as its 9.00 and can understand this. He also said that something broke on the tool and he was charged a 25.00 fee when he returned the item.
Well it just so happens that he left (of all things) the rental agreement with the tool place close to here after he was done yesterday on the lawn. I picked it up and read it and it says nothing about any damages and there was a rental fee of 40.00 for the cutter and 25.00 for something else. I suspected he wasn't aware of the 25.00 charge for renting this tool and tried to pass it on to me. After my wife called the tool rental place today they said nothing was damaged and that the 25.00 charge is an additional piece that was needed for the primary tool rental.
So now it looks like we have hired a dishonest contractor. He's finishing up today and I'll post the outcome back here.
Too bad for him because we still need a suspended ceiling and a room built in the basement and would've more than likely used him again.
Thanks for all the advice.