Peace entered into a period of exclusivity with an unnamed buyer on July 3 after agreeing in principle terms for a sale.
But the Albion chief has pulled the plug on the deal, claiming the “potential purchaser is unable to fulfil the terms of that agreement at this time.”
In a statement on the club website he added: “The club’s long-term stability and continued development is of paramount importance, and I am not satisfied that the interests of West Bromwich Albion would have been best served by my continuing discussions at present.”
Peace now plans to revisit “strong interest” from “other parties” interested in buying the club, but he has again sought to assure supporters that the ongoing process will not stop West Brom buying players ahead of the new season.
He said: “This is a period in which there is always an understandable impatience for new signings to strengthen our squad and nowhere is this pressure more keenly felt than at board level.
“We have been busy pursuing transfer targets with the determined intention of helping our Head Coach Tony Pulis assemble a squad which he can take into the new Barclays Premier League campaign with optimism.
“But, as Tony has confirmed, we will not be held to ransom. Of course I know this can add to supporter frustration but I do believe they will see our efforts come to fruition over the course of the transfer window.”