The Hobbit Contract, Part 4

The first three parts of our ongoing series about the contract in The Hobbit movie have already taken us through a variety of contract law topics.  At this point, unless there’s a strong call to go through the entirety of the contract, we are going to start skipping less interesting clauses in favor of ones that present new or more complex issues.

I. Signatures and Witnesses

At the beginning of the second ‘page’ of the contract we have this paragraph:

The principles [sic] agreeing to this contract, namely the Company [as represented by Thorin Oakenshield] and the Burglar, and known collectively henceforth as the Parties, shall signify their agreement to all clauses contained herein [the Conditions of Engagement] by signing or making their marks in the spaces provided for so doing, and affixing seals if applicable.  The Witnesses to this Contract, being those others whose signatures, marks or seals are affixed hereto, affirm, state and declare their understanding and unbiased agreement to all that is contained herein.

This language is a little unusual.  Contracts—at least modern ones—do not normally specify the signature process in such detail.  But there’s nothing inherently wrong with it, either, apart from the misspelling of ‘principal.’

The signature clause states that the parties may “sign or make their mark.”  This is correct.  There is no legal requirement that a signature be the signer’s name, much less the signer’s name handwritten in cursive.  Instead, “the signature to a memorandum may be any symbol made or adopted with an intention, actual or apparent, to authenticate the writing as that of the signer.”  Restatement (Second) of Contracts § 134.  A mark or even an affixed seal could suffice.

Most legal documents do not require witnesses unless they require them by their own terms.  One notable exception is a will.  The exact requirements vary by jurisdiction, but most require that wills be witnessed, typically by disinterested parties.  In this case a witness signature does not seem to be required in order for the contract to be valid, but it’s not a bad idea in case there is a dispute later.  It is curious, however, that the witnesses (in reality the witness, since only Balin appears as witness) “affirm, state and declare their understanding and unbiased agreement” to the contract.  It’s unclear what, if anything, the contract requires a witness to agree to.  The role of a witness is usually not to understand and agree to the contract but rather to witness the signing by the parties: did the parties sign, were they the correct people, were they mentally competent, etc.  So this paragraph is a little odd but probably harmless.

II. Written Contract Required?

Relatedly, one might ask if a written and signed contract was necessary at all.  Some types of contracts must be in writing.  The Statute of Frauds refers collectively to laws that list the kinds of contracts that must be in writing.  Although the Statute of Frauds got its start in England in 1677, it has since been almost entirely repealed there while it has grown more influential in the US.    But the most substantial repeal of the Statute of Frauds in England didn’t occur until 1954, well after The Hobbit was written, and so Tolkien may have contemplated some sort of Statute of Frauds existing in Middle Earth.

However, none of the traditional Statute of Frauds categories likely apply in this case.  The closest category would be contracts that cannot be performed in one year, but the adventure was complete within the year 2941, not counting the return trip.  Thus, the contract could be performed within a year.  Note that it’s not contracts that might not be performed in a year but rather contracts that cannot be performed in a year.  An example would be if the contract said something like “the Parties shall leave for the Lonely Mountain two years from the signing of this contract.”

III. Non-disclosure Agreements

Next we have a non-disclosure or confidentiality clause:

Confidentiality is of utmost importance and must be strictly maintained at all times.  During the course of his employment with the Company, Burglar will hear, see, learn, apprehend, comprehend, and, in short, gain knowledge of particular facts, ideas, plans, strategies, theories, geography, cartography, iconography, means, tactics and/or policies, whether actual, tangible, conceptual, historical or fanciful.  Burglar undertakes and agrees to maintain this knowledge in utmost secrecy and confidentiality, and to neither divulge nor make known said knowledge by any means, including but not limited to speech, writing, demonstration, re-enactment, mime, or storage and retrieval within means or apparatus currently known or unknown or as yet unthought of.

(It is a plain drafting error to refer to “the course of [the Burglar’s] employment with the company”, since a later clause specifies in no uncertain terms that “Burglar is in all respects an independent contractor, and not an employee … of the Company.”)

This confidentiality agreement is a little overbroad, since by its strict terms it requires Bilbo to keep confident anything he learns on the journey, not just things he learns in confidence.  The fact that information is already publicly known is usually a defense to a breach of confidentiality, since the information wasn’t actually secret.  Overbreadth probably isn’t fatal to the clause, however.

What’s really unusual about this part of the contract is that it doesn’t appear to include a clause acknowledging that monetary damages alone would be inadequate compensation in the event of a breach of confidentiality.  The purpose of such a clause is to make it easier to obtain an injunction ordering the breaching party to stop disclosing the confidential information.  Ordinarily breach of contract results in a payment of monetary damages, and getting an injunction usually requires showing, among other things, that those damages are insufficient to remedy the harm done.

What’s doubly weird about this is that the contract does have this clause later on:

Burglar acknowledges that monetary damages alone will be adequate compensation for a breach of this contract by the Company.

We’ll talk more about this clause in a later post, but it’s curious that the contract only contemplates injunctions defensively (i.e. protecting the Company from them) and not offensively (i.e. making it easier to enjoin Bilbo).