The "Peace" achievement can easily be missed.
The opportunity to earn it comes only once during each play-through. When the Seneschal offers you a merciful death, turn away from him and walk back toward the image of yourself and your home town.
He will express disappointment, and you will find yourself in Cassardis... mostly as it was prior to the dragon's attack. Damaged buildings remain damaged. Your beloved is not
living in your house, etc.
You can wander around the town and speak with people all you like, until you draw near to the gates where Quina and Adaro stand. Then a cut scene plays, and credits roll.
When the credits stop, the "Retry" option is offered.
That's right. The game won't allow you to continue a peaceful existence. It requires you to finish the confrontation with the Seneschal.
At least you get an achievement for exploring the other option...