Hm, interesting twist there.
I have always discouraged players from choosing a Demonic Pact for their Sorcerer. It's simply desaster waiting to happen, in exactly the same scenario that just happened in Style's group. Sorcerer takes it too far, Honourable char won't be having with it, and the fur is gonna fly.
So I've always told players (well, there were two who were interested in it) that Demonic Pact is a valid rule and thus I won't downright forbid them to take it, but they have to expect trouble with the rest of the party, up to the possibility of getting killed by another PC, and I don't want to hear any whining about it.
Also, every player is responsible for creating a character that can be justified to travel and adventure with the other characters.
Concerning PvP in general, I don't want it in my games. And so far I've only had it once, but that was a different story. But I can imagine very well that it can lead to hard feelings, because nobody likes losing their character.