How is this any different, really, than signing a lease, phone contract, or gym membership, or for that matter a 30 year mortgage? Why is it ok to agree to pay for a service for a year for these items, yet not in the Martial Arts?
A contract is a contract, both parties agreed to it. If the person who signed the contract isn't willing to live with the consequenses if they can't fulfill that contract or if they don't read the contract, then they shouldn't sign the contract in the first place. It's not the instructors fault if you choose not to go to class.
Do I like long term contracts? no, but they often provide additional benefits, like saving money over time.