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Legally, unless you have paper signed and notarized with an anticompetive clause on it, he can do whatever he likes with his code.
However, if there was a conversation at some point between the two of you that he not turn around and sell the stuff you financed to have developed, then it'd be very dubious ethically. Of course, ethics have no bearing as to whether he can or can't do something, just whether he should or shouldn't.
Whenever I do any development work that I feel I could remarket down the road, I always take steps to clarify what the situation is. Even a simple query like "This work could probably make me some money down the road, are you okay with my reselling it to others later on?" would let everyone know where they stand, and any respectable people would understand and have few problems with contractors remarketing their skills. We do, after all, have to eat.
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