I agree, all contingencies must be removed before the deal is done. When I sold real estate many years ago I always had the seller put contingencies in the contract for:
Lending
Appraisal
Home Inspection
Since you can't come to a new price, I would think the contract would allow the seller to take other offers. Now, the seller should quickly produce the document to termination the contract and return your earnest money.
It's certainly more important that a buyer doesn't put an offer on two houses at the same time or they could be on the hook for two houses.