Can we have a "huh?"
Of course, there is no such rule. :) Contractions were used by Shakespeare-- they've been used informally for many centuries. They are used in third-person all the time-- whatever fits the voice. Writers who say something like that don't actually have a voice, I suspect, or they'd know that they need to sound like their voice or the character voice. They invoke non-existent rules because they can't really recognize when a
voice is working.
If the voice is formal, then sure, no contractions might work. If it's a historical novel, maybe. If it's narrated by a pompous character, sure.
But writers need to create their voices, and while of course they should default to grammar rules (unless they have reason to break them), contractions are just as legal as the terms they replace. I'd even say that the rhythm of the sentence would often dictate a contraction as it will have (usually) fewer syllables. But obviously someone like the "sage critiquer" who doesn't recognize voice wouldn't notice the rhythm imparted by more or fewer syllables.
In fact, in the past, they had more contractions, even in names. Thom. Nelson, Jos. Epsen. My dad always signs his name "Rob't Todd." Etc. "Oughtn't," "Durs'nt," "Tis." "Ain't," in fact, was a perfectly acceptable contraction well into the 19th C.
So... what have you heard about other supposed "rules"? What are some "rules" that you've been told to follow that aren't rules at all?