Your son is absolutely right (as is pist) and the teacher is an idiot. (No offence meant, of course.
This is a direct quote from "Practical English Usage" (Michael Swan, OUP, 1980 & 1995), a standard text used in TESL. From the section on apostrophes:
1. Missing letters: Apostrophes show where we have left letters out of a contracted form. can't (= cannot) it's = it is/has (I'd (= I would/had) who's (= who is/has)
2. Possessives: We use apostrophes before or after the possessive -s ending of nouns:
the girl's father; Charles's wife; three miles' walk
Possessive determiners and pronouns do not have apostrophes:
Has the cat had its food yet (NOT ... it's food ...)
This is yours (NOT ... your's ...)
Whose is the coat? (NOT Who's ...
"Excuse me Mrs Teacher, please can I show you this and ask you to look at Johnny's homework again?"
Oh, and buy her a copy of "Eats, Shoots and Leaves" as an end of year present.