Disclaimer: I know NOTHING about contract work. However, I'd be inclined to say, yes they can. It's quite unfortunate knowing you have to give up your baby (I can sympathize), but I personally don't see any logical way around it (logic is not always present in law though ;)). I see this for two reasons:

• Firstly, outright disobeying their request would probably be in violation of your contract. That's generally not a good thing.
• When you work on a contract basis (I'm pulling this from tilly's Works-for-hire node), everything you work on for the contract is under their ownership. That being said, it's probably at their discretion what a "quality product" is. Unless your development contract explicitly says that you do not have to document the code, it's probably their decision what degree of documentation you must provide.

Also, if your argument against doing it is that they'll simply keep modifying the code as their needs change, that's not much of a leg to stand on. As stated earlier, anything in the contract is theirs, they can modify it however they want once the contract is over.
Thank *you* for the insightful post, and best wishes in your endeavour :)