December 9, 2012

by Scott Raymond Maucere

Now it’s time for a little holiday fun.

The first installment of Peter Jackson’s adaptation of J. R. R. Tolkien’s literature classic The Hobbit comes out this week.  Confession: I’ve been imagining the release of this film since I first read the novel when I was 13.  And in honor of this red-letter week, my blog post will be about The Hobbit.

And in addition to being a fan, since I’m a lawyer who drafts and litigates contracts and transnational agreements for a living, it’s only natural that I would involuntarily analyze what is perhaps the most famous legal agreement in all of modern literature: Bilbo Baggins’ contract with Thorin Oakenshield and his Company of Dwarves.  Specifically, is that contract legally enforceable?

Pictured: 300 billable hours

Pictured: 300 billable hours

When I say enforceable, I mean that a court of law or equity will find that the terms of the agreement are sufficient to force the parties to abide by their obligations.  Or would the terms of the contract itself be so onerous on poor Mr. Bilbo that, halfway through the story, in between goblin kings and nasty Gollum and giant spiders and wargs, he decides that he has had enough, and he wants out.  Can he go to court and declare the whole thing off?

So here is likely the only legal analysis of Bilbo’s contract you will ever have the pleasure (or pain) to read. I’m probably ruining the fun of the story in the process. So I guess when I say holiday fun, I mean fun . . . for lawyers.  But bear with me, because it certainly is fascinating (again, for me).

Note:  Minor plot-related spoilers ahead. This is about the book’s contract, not the contract adapted in the film, which, according to promotional photographs, looks absolutely breathtaking.

Keep in mind that while I practice international law, Middle-earth most certainly falls outside of my area of experience.  So I will stay within the sphere of my practice, common law jurisdictions, in particular the US common law of contracts.  And since this is all for fun, I won’t bore you with in-depth citations, and don’t expect any of this to be actually legally binding (i.e. you should not use this as legal advice to get out of your own dragon burgling agreements).

In The Hobbit, 13 dwarves, led by the mighty Thorin Oakenshield and Gandalf the Wizard show up unexpectedly on Bilbo Baggins’ doorstep in the Shire one fateful Wednesday at tea-time.  They need a co-conspirator with whom to share an adventure.  Smaug the Dragon has seized the dwarves’ ancestral home under the Lonely Mountain, along with the fabled Arkenstone (to which Thorin Oakenshield is heir) and a great mound of gold and jewels.  It seems that a 14th member is needed for the Company to avoid bad luck, and they need someone able to sneak into the mountain and steal the treasure out from under Smaug.  Enter Bilbo.  Gandalf has (perhaps exaggerating) touted Bilbo’s burgling expertise, and Thorin has come to enlist the hapless hobbit in their little scheme.

Bilbo is reluctant to join them, but when presented with a letter spelling out the terms of his engagement, he hurries to catch up.

Here’s the text of the engagement letter/contract from Chapter 2:

Thorin and Company to Burglar Bilbo greeting! For your hospitality our sincerest thanks and for your offer of professional assistance our grateful acceptance.  Terms: cash on delivery, up to and not exceeding one-fourteenth of total profits (if any); all traveling expenses guaranteed in any event; funeral expenses to be defrayed by us or our representative, if occasion arises and the matter is not otherwise arranged for . . .

A contract is a legally binding promise between two or more parties. In order for the contract to be valid, there must be mutual intent, there must be an offer and acceptance, and there must be sufficient consideration.

Here, there is an offer and acceptance. Bilbo declared bravely (or foolishly) the night before that he would go and be their burglar, and here in the text of the agreement they accepted. Bilbo, by joining the Company, manifests the mutual intent to participate in the employment.  There’s also sufficient consideration.  It’s a contingency contract, promising a fourteenth share of the after-expense profits in exchange for Bilbo’s performance of obligations COD.

Just what Bilbo’s obligations are isn’t explicit in the Contract, but it references Bilbo’s offer. In the book when he makes the offer at the end of Chapter 1, he agrees to enter the Lonely Mountain by the secret entrance and obtain treasure on behalf of the company. There might be some ambiguity here, which would be construed in favor of Bilbo, but it would probably not void the entire contract. The court would likely apply reasonable implied terms of construction according to their intent.

So far so good.

However, the purpose of the contract must also be lawful. In a contract, if the purpose of the agreement is to achieve an illegal end, the contract will be unenforceable.  For example, a contract for one person to kill another person is unenforceable because it requires an illegal act and goes against the public policy that we don’t want people murdering each other.

In The Hobbit, Bilbo’s job is of course to be a “burglar.”  Burglary is a crime under the common law in the US, English common law, and most other countries.  So then the question becomes: is burglary the kind of illegal activity that would be ruled unenforceable in a court?

Burglary is defined in the common law as the unlawful breaking and entering of one’s dwelling at night for the purpose of committing a felony.

In the book, Bilbo’s job is to sneak into Smaug’s Lair at night and steal the gold and treasure out from under the dragon.  In almost any state the value of the treasures stolen would constitute a felony.  Therefore, you can easily make the case that Bilbo was burgling, and that he was in fact hired for an illegal purpose.

But the dwarves would likely argue that there in fact is no illegal purpose.  Burglary in this case, they might argue, is merely a term of convenience, and no actual illegal activity was ever contemplated.  Thorin and the other dwarves clearly believed they had a legal right to not only the Arkenstone but to the entire treasure amassed by Smaug. Smaug obtained the treasure through illegal means himself, and even possessed the dwelling only through his trespass—indeed Thorin had the key to the place. In this case it wasn’t really burglary at all.  It was the self-help repossession of the treasure and property of the dwarves.  Bilbo wasn’t really hired to be a thief, but a sort of Middle-earth repo man.

So is self-help repossession an illegal activity prohibited by the court? It probably depends on the jurisdiction.  In the US, the uniform residential landlord and tenant act generally prohibits self-help eviction, even if the tenant isn’t lawfully possessing the property.  Self-help repossession of treasure may be more tolerated, but generally you can’t take back property if it would “breach the peace” (i.e. breaking into a building to take back even your stuff is frowned on by the law—I’m talking to you, O.J. Simpson).

The dwarves would have some defenses, but in my opinion Bilbo would have a good case that the contract should be declared unenforceable because it is for an illegal purpose.

Of course, there are a lot of other factors which may affect the outcome.  Exactly where is this contract going to be heard?  It was signed in the Shire, but it was to be performed at the Lonely Mountain, which is under dwarf jurisdiction (or so they say) but it also may fall under the jurisdiction of Dale, which is presumably the closest civilization with working courts or judges (The Shire had constables and provincial officials, but there would be a real question of whether they could exercise jurisdiction purely because the plaintiff resides there).  A better tactic may be to submit to the jurisdiction of Rivendell, where wisdom and neutrality would be easier to find.

Keep in mind that this is a contract for employment.  As such, various labor and employment laws will apply.  If Thorin and Co. prevailed in enforcing the contract, they would be able to recover for damages, but not specific performance. Contracts for personal service, such as employment contracts, cannot be remedied by specific performance because doing so would violate the 13th Amendment, which prohibits involuntary servitude (slavery).

There you go. Bilbo went through all that for nothing.  If he had hired me as his lawyer, he would have stayed home comfortably, and not had to go through any more adventures.  Neither would Frodo, I suppose. Which would mean that the One Ring wouldn’t have been destroyed.

There go the lawyers again, ruining everybody’s good time.

You can email Scott Maucere at or follow him on twitter @smaucere

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