Good for you, it can be hard to lay down the law, but it is necessary sometimes.
I had never cancelled a contract before this summer. But this one parent, after giving notice and the child was leaving in 2 weeks, she came 15 minutes late, for the 4th time. Her 3rd warning was a "final notice." I no longer charge a late fee, but have it stated that I will terminate. So, I did. Met her at the door with the child and the bag packed. I knew that if I let it go that day, she would come late for the next 2 weeks. She wasn't surprised, either. She was testing me, and I knew it, too. So I hated to send the child home without a proper "daycare good-bye" but I can't go on having people take advantage. So, of course now, if any of the other parents hear the story, they will know too, that I will enforce the contract and my policies.