The Hobbit Contract, Part 3

Our first two posts about the contract in The Hobbit movie brought us through some boilerplate and into the substance of the contract, namely some of Bilbo’s obligations and the nature of the Adventure.  From a legal standpoint we’ve discussed integration clauses, amendments, severability clauses, consideration, defined terms, contract interpretation, and liability waivers.  And we’ve still only begun!

I. More Waivers

The next section is yet another waiver

Burglar holds harmless and without blame in perpetuity the Company and its successors for any notoriety, incarceration, or proceedings brought against, in regard to or as a result of the adventure or any activities related thereto.

Also includes slander, libel, loss of face or of social standing in country of Burglar’s origin.

Remedies shall similarly not be sought for any unlooked-for misfortune befalling Burglar’s home during his absence.

The smaller text is written in the margin or otherwise in smaller writing.  There’s a lot of that kind of writing in the margins that we’ll be referring to as we go through the contract.  For the most part the size of the print doesn’t matter, but there are some contract terms, such as warranty disclaimers, that must be printed conspicuously, which usually means large print or all caps.  UCC §§ 2-316(2),  1-201(b)(10).  At common law we suspect the rules were even looser.

This set of waivers is not particularly objectionable.  As discussed in the prior post, the actual scope of the waiver may not be as broad as the language suggests.  For example, if the Dwarves intentionally burned down Bag End, this waiver would not prevent Bilbo from suing them for the damage.

It may bear mentioning that the slander waiver only protects the Company.  Bilbo could still sue the actual slanderer, of course.  Traditionally this has been easier to do in England than the United States.  At common law, for example, truth was no defense to criminal libel (also known as seditious libel).  Garrison v. Louisiana, 379 U.S. 64, 67-68 (1964).

II. Payment

Now we come to some terms of the contract actually described in the book:

Cash on delivery, up to and not exceeding one fourteenth of the total profit [if any]. Not including any of the gross paid to other parties in lieu of royalties or help and provisions given or loaned.

All traveling expenses guaranteed in any event. But refer to attached and appended conditions, clauses and riders regarding any Return Journey. ‘Traveling expenses’ shall be understood to mean basic fare as seen fit by the Company. ‘Luxury’ catering or accomodation over and above this standard shall be enjoyed only at Burglar’s considerable [but justifiable] expense.

Funeral expenses to be defrayed by us or our representatives if occasion arises and the matter is not otherwise arranged for. Basic funeral to ‘commoner’ or peasant standard is allowed for only. Lavish ceremonies and jewelled (sic) or gilded coffins not provided. Plain pine box is the normal standard. Transport of any remains, in whole or in part, back to the country of Burglar’s origin is not included.

Most of these clauses are fairly straightforward.  In terms of the plot, the more important clause is the one regarding profits.  Already we see part of the definition: it excludes royalties paid to others and anything given or loaned to Bilbo counts against it.  In the margins we see some more relevant terms:

Burglar acknowledges and agrees that each item of the Company’s valuables, goods, money or merchandise which he recovers from the Lonely Mountain [the ‘Recovered Goods’] during the term of his engagement with the Company, shall remain the Property of the Company at all times, and in all respects, without limitation.

Furthermore, the company shall retain any and all Recovered Goods until such a time as a full and final reckoning can be made, from which the Total Profits can then be established.  Then, and only then, will the Burglar’s fourteenth share be calculated and decided.

So Bilbo can’t just pick up some treasure that he likes and decide that it’s part of (or the entirety of) his share.  Instead, as provided by yet another clause, he will be paid in gold or its equivalent, in correct weight or of good quality, respectively.  So Bilbo really can’t lay claim to any particular article of treasure.  Indeed, the Dwarves could conceivably purchase gold from somewhere else and pay him with that.  He’s not entitled to any part of the treasure itself as such.

III. Spoilers and Conclusion

In this section we’ll discuss how these contract terms could affect the plot.  The book has been out for about eighty years, but nonetheless, spoiler alert:

As anyone who has read the book knows, the definition of Bilbo’s “fourteenth share of total profits” goes directly to a major issue in the plot, namely Bilbo’s taking of the Arkenstone.  In the book Bilbo feels comfortable taking it, since he figures it’s worth his fourteenth share, and the contract didn’t say which fourteenth he could take.  This contract eliminates that possibility.  We doubt that the plot will actually be modified to take this into account, but it may be an example of the writer of the contract being a bit too clever.

Apart from that issue the contract continues to be reasonably well-written.  There is one major omission that we’ve noticed.  We’ll see what else we find!