Before bidding closes, sellers can cancel any bid, for any reason, without explanation. Doing this may be rude, but it is meant to allow the seller to protect herself from potential fraud.
After the sale, there are only two ways to cancel a sale.
The first is a Mutual Cancellation. This will come from eBay and the buyer can accept the MC, ending the transaction and allowing both parties to leave appropriate feedback. Or the buyer can ignore the request, in which case the MC will eventually close, freeing both parties and allowing feedback. Or the buyer can REFUSE the request, leaving the transaction open, requiring the seller to complete it, and again allowing feedback to be left.
The other way is an Unpaid Item Dispute.
Many sellers have these open automatically if payment has not been made within 96 hours (4 days) of the sale. This can be closed by paying for the item. If the item is not paid, the buyer gets a Strike which makes it more difficult to buy in future and no feedback can be left by either party.
An email from the seller telling the buyer that he will not complete the sale is not valid. Tell your seller to open a Mutual Cancellation. Then you can agree -or not- and leave appropriate feedback.
