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A student who fails to study, needs to realize that there are consequences for that, regardless of the reason, though the reason may be quite "acceptable" it never warrants bad behavior. That's what morality is all about.

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If you address the reason that the student is failing to study, if you accept the child for who he is, not who you would like him to be, if you don't try to fit children into a box, then a miraculous thing happens. These children start to develop self esteem and a sense of self-worth. If you love them unconditionally (as a teacher), they will start to trust you and want to please you. It is at that point that you can help them find out who they really are and who they want to be. Sure, you can shape their behavior by giving them a negative consequence. However, I prefer to do more than shape behavior.

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At that point you can weigh the excuses, but still must enforce the consequences or the students will be taught that with a good enough excuse, an action is okay.

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I disagree with your stated method. Nothing is in black and white. I've had students who know nothing more than negative consequences for their "bad behaviors" including abuse. Is that a good enough excuse? I can't tell you how devastating it is to know what kind of life some children live. I've seen a lot and I know that I am doing the right thing when it comes to them. Of course, I differentiate. I would and have given negative consequences for cheating if it is warranted. However, I prefer to build them up. I prefer to show them that it is okay to make mistakes. I know from experience that they learn more from positive interactions and helping them understand the reasons for doing certain actions than delivering punitive consequences.

I have different views as to the definitions of morals, values, and character. I don't think you can clearly define them (maybe in a BROAD, general sense) due to the fact that people have their own ideas and definitions.