Bob claims he never received fiat funds?
I'm not worried about the reverse case as there no question about bitcoins going through.
The graphic should show what happens if Bob does not receive the wire transfer and they agree to cancel the transaction. I guess in that case a "rollback transaction" is necessary (input: deposit 1.2, output: Bob 1.1 , Alice 0.1) right?
I think the point there was Bob CLAIMS to have not received the funds, when in reality he has. He just wants to keep the fiat and btc