the dev failed to update the game status on itch to “cancelled” I doubt itch will be monitoring every game on other platforms to check if its still developed and puts the onus on the dev to do it. The contract that you mention is a general contract that I don’t think Itch manually makes with each and every developer on the site. Similar to how other platforms sell products have a rate for hosting and selling like Steam, Itunes, Epic etc.
Now as a buyer you should be able to do your due diligence before buying any game.
Should you be able to report an abandoned game that can be bought on itch so that itch does someething about it? Of course.
Itch shouldn’t allow devs to sell games that are still “in development” imo