James Daily, a lawyer and co-author of The Law and Superheroes, typically focuses his legal critiques on the superhero world at the Law and the Multiverse website he runs with fellow lawyer and co-author Ryan Davidson. And in this piece for Wired, James Daily dissects the lengthy contract between Bilbo Baggins and the dwarves in J.R.R. Tolkien’s The Hobbit.
Two clauses describe Bilbo’s primary obligations:
I, the undersigned, [referred to hereinafter as Burglar,] agree to travel to the Lonely Mountain, path to be determined by Thorin Oakenshield, who has a right to alter the course of the journey at his so choosing, without prior notification and/or liability for accident or injury incurred.
The aforementioned journey and subsequent extraction from the Lonely Mountain of any and all goods, valuables and chattels [which activities are described collectively herein as the Adventure] shall proceed in a timely manner and with all due care and consideration as seen fit by said Thorin Oakenshield and companions, numbering thirteen more or less, to wit, the Company.
All contracts require some consideration from all parties to the contract. Consideration, in the contract sense, means a bargained-for performance or promise. Restatement (Second) of Contracts § 71(1). Basically, this is something of value given or promised as part of the agreement. This can be anything that the parties agree is valuable; the classic example is a single peppercorn. Whitney v. Stearns, 16 Me. 394, 397 (1839).
Here, Bilbo is promising to go with the Company to the Lonely Mountain and performing various services there, including extracting the treasure, plus a few more services we’ll get to later. In turn, as we shall see, the Company promises to pay Bilbo one fourteenth of the profits, plus a few other obligations. Thus we have “a promise for a promise,” otherwise known as a bilateral contract.
There are some other details to notice in these clauses. One is the use of defined terms (e.g. “referred to hereinafter as Burglar”). The parties to a contract may define terms however they wish, even in ways that contradict the definition used in statutes or regulations.
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.
Recommended reading if you’re a fan of the book. I saw the film in late 2012, but must admit that it was too long for my taste. And they’re making The Hobbit a trilogy!?