Not being allowed to compete in other tournaments is fairly reasonable. Not being allowed to
attend (not compete in) other tournaments or seminars makes my alarm bells go off. To me, that signifies that they're afraid of losing you to another system/school, which means they aren't confident (conciously or subconciously) in the material they teach. But, that's just my little monkeyboy opinion, which is worth about $.02 (US).
Contracts can be good to help retain students by giving them a reduced rate for committing to a certain period of time. However, the student must be allowed to get out of the contract under certain circumstances (injury, death in the family, work relocation, alien abduction, etc.), and perhaps also have an option to pay some sort of early release fee as another way out of the contract. Other than that, I don't believe a contract should place any other restrictions on the students, especially regarding attendance of tournaments and seminars. Again, I can see disallowing
competing in other tournaments, but I don't like disallowing
attendance of same.
My instructor, just for poops-n-giggles, signed up for a TKD school while he was stationed here while in the U.S.A.F. He ended up hurting his knee at work pretty badly. Took a letter from a base physician to the guy running the school, basically saying that he shouldn't be goin' around kicking things. Guy wouldn't let my instructor out of the contract. That, my friends, is pure, unadulterated
BS.
Now that I think about it (goin' stream of conciousness here, folks...watch out!), there would probably be some stipulations I'd put in the contract. If a student is unable to attend because they've been arrested for a felony involving physical violence, I'd say they are still entitled to pay off the remainder of the contract, but won't be allowed to train (if not in jail) during the contract's duration and is effectively expelled from the school. Maybe have something (as I think was mentioned in this thread) saying that a person can't make money off the school/system until a full teaching certification/rank has been reached (JKD instructors, take note

). Fighting with other students results in expulsion along with payment of the remainder of the contract. Causing trouble with other schools results in the same punishment. Ideally, these punishments would never have to be enforced.
But I love making people pay for their stupidity
Cthulhu
ramblin'