That being said, the problem I have with this situation is that the contract does not leave room for unforeseen events which might affect the contract.
If Viviano had fraudulently hidden that she had allergies or exercise induced asthma, I could understand the Navy's hard line. The Navy requires that its members regularly pass PT. And in order for a member to pass PT, many of them must exercise to make the standards.
I would favor a ROTC contract which starts with a comprehensive physical exam requirement. After the exam, I would like to see wording takes into account that if there was no fraud involved in the signing of the contract, and that if there was a serious health change due to circumstances beyond the control of the student that the Navy would cancel the agreement and no further action would be required of either party.
They already do. Like I said earlier, the military has the right to terminate the scholarship contract at any time, with or without cause -- and that's usually how they handle stuff like this.