My first suggestion would be to speak with your Realtor who might have more understanding of the particulars of the Offer To Purchase or the reasons behind backing out. With Short Sales there are many variables to consider. The Contract may be legally binding with the seller however it is usually subject to third party approval being the lender. The lender can approve the offer price, counter offer or reject it. It would help if you knew the reason why the seller backed out, if the short sale asking price, offer price was already lender approved or knew what stage the short sale was in. Depending on how your offer was agreed upon by the seller you may have legitimate argument with respect to being out the cost for anything like a home inspection due to the actions of the seller and may have some legal recourse. I would first ask your Realtor to explain this to you and if you feel as though you have been damaged as a result of the actions of the Seller then I would advise you speak with an Attorney as to what legal rights you have under the law.
I hope this helps
Gillis and Company
A division of ERA Key Realty Services
Having an appreciation for those that are experiencing the necessity of a short sale would lead me to question them backing out and hope they have identified a better option to persue.