Where's your Agent?!
In order for the Seller to cancel the contract a Notice to Perform must be submitted to the Buyer first.
Assuming you are using the CAR Residential Purchase Contract, Paragraph 14C indicates the seller has the right to give the buyer a notice to perform (CAR Form NBP) which gives the buyer an additional 2 days to remove the contingency in writing. If the buyer doesn't remove the contingency, then the seller may cancel the contract in writing and not be in breach of contract. My opinion would be that the Seller could then accept another offer of their choice.
Call your agent!