How to address the issue of a vertical window that was installed horizontally
Any contractor worth his hammer would've noticed that and brought it to your attention. The window needs to be replaced or installed vertically as intended. Whether he's liable is a contractual issue and off-topic here. 

Drainage holes are not an adequate solution. The window will not continue to operate well over time. The hardware isn't designed for sideways loading. Nor are the weather seals, as you've discovered. For these reasons it may well be an issue at sale time in addition to being an operational and weather issue. 

Best of luck.