A Hobbit’s Contract
My first-grader and I have been reading “the Hobbit,” in anticipation of the movie coming out this month. While it was one of my favorite books as a kid, I had not read it in many years. Doing so, I was surprised at the amount of legal issues in the books, particularly contract law, which is usually not the type of thing you expect to find in a young adult fantasy novel.
[Spoilers below-Note that the following is taken from the book. The movie has some differences in how Bilbo joins the dwarves]
Our hero and title hobbit in the story is Mr. Bilbo Baggins. At the beginning of the story, Mr. Baggins claims to be comfortably ensconced in his respectable lifestyle, when suddenly, in a flurry of activity, he meets a wizard and thirteen dwarves who all descend on his home, eat several meals, sing songs, spend the night, and tell tales of their quest to reclaim their home from the dragon, Smaug. Getting caught up in the chaos, Mr. Baggins finds himself agreeing to a contract as a “burglar” (or “expert treasure hunter” if he prefers) for a portion of the treasure and is swept up and on the road to the dragon without even having time to grab a pocket handkerchief.
The dwarves arrive at Bilbo’s home in response to an “offer” from a mark on the door, which they explain states “Burglar wants a good job, plenty of Excitement and reasonable Reward.” The mark on the door is put there by the wizard, Gandalf, who (for mysterious wizard reasons of his own) has determined that Bilbo should be the 14th member of the dwarves’ company. When told, Bilbo of course, denies having put the mark but then, his pride hurt and some doubts of his character by the dwarves, states to them, “[t]ell me what you want done, and I will try it, if I have to walk from here to the East of East and fight the wild Were-worms in the Last Desert.”
The next morning, Bilbo sleeps late, and relieved to find the dwarves have already gone. He then sits down to a leisurely breakfast, and then begins a second breakfast, when the wizard bursts in looking for the hobbit, and tells him to check the mantel for the note the dwarves had left. The note reads as follows:
“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 travelling expenses guaranteed in any event; funeral expenses to be defrayed by us or our representatives, if occasion arises and the matter is not otherwise arranged for.
Thinking it unnecessary to disturb your esteemed repose, we have proceeded in advance to make requisite preparations, and shall await your respected person at the Green Dragon Inn, Bywater, at 11 a.m. sharp. Trusting that you will be punctual,
We have the honour to remain
Thorin & Co.”
Gandalf hurries along Bilbo who ten minutes later finds himself at the Green Dragon Inn and the start of his adventure. Based on these series of events, does a contract exists? When was it formed and what are its terms?
First, we will assume that contract law in Hobbiton and the Shire is, for basic purposes the same as law in 2012 North Carolina. This is not an unreasonable assumption as Bilbo’s homeland appears to be closely modeled on Edwardian England, of which its author was most familiar. Both the English courts of that time and North Carolina courts of today, base much of its law on the common law of England.
Second, a contract is more than a unilateral promise. The difference is “consideration.” That simply means that both sides have some kind of obligation under the agreement to do something. The obligations of each party don’t have to be equal or fair, just that there is something going both ways. A contract also requires both the parties to have a “meeting of the minds” as to its terms. A contract first has an “offer,” which sets forth what each party to the contract brings. After the offer, there must then be an “acceptance,” by the other party before a binding contract is issued. The matter becomes complicated as if an “acceptance” has different terms than the “offer,” it is really a second offer that the original party must now accept.
Looking at Mr. Baggins’ negotiations, the mark on the door would probably be considered an advertisement or an invitation to make an offer rather than an offer itself. Similar to a classified ad. Therefore the dwarves coming to his house could not be an “acceptance.” Bilbo’s later oral statement when he says he will walk from here to the East of the East and fight the wild Were-worms in the Last Desert, is difficult to determine. If I said that to you in North Carolina today, it would simply be a joke, or an expression, and would not be intended or understood literally. The Third Age of Middle Earth may be a bit different as there may actually be a location called “East of the East” and the “Last Desert” and creatures known as “Were-worms.” Still, it does appear that Bilbo is expressing his desire to try whatever the dwarves require rather than exactly what he states.
The next in the series of events is the note Bilbo finds on the mantle. Even if Bilbo’s statement the night before was an offer, this note can’t be an acceptance as it changes those terms. Therefore it is an offer. While the offer is short, it does state the consideration. Bilbo is to provide his “professional assistance” and the dwarves will provide a share of the profits. “Professional assistance” is a bit vague on what Bilbo is supposed to do. To make that determination, the courts look to the common, understood meaning of the words. They then look to see if the provision is in harmony with the rest of the contract. If the court still finds the phrase to be “ambiguous” it could consider the conversations made the night before. If a court were to consider this “parol evidence,” it is clear to me that Bilbo is hired to join the dwarves for an expedition to the Lonely Mountain (where the dragon has the dwarves’ home and treasure) and that he is to be a “burglar.” Of course, the best practice is to get it all in writing and reviewed by an attorney so that all the concepts and terms are clear and defines and a court doesn’t have to hold hearings on what was said at a party the night before the offer was extended
There is no mention in the book of Bilbo signing any document or even stating orally “I agree to your terms.” However, since he shows up at the Green Dragon Inn (with hardly a minute to spare) and proceeds with the dwarves for many months toward the goal of the Lonely Mountain, the law deems that an acceptance by performance. So as we leave Hobbiton, Bilbo is under a binding contract for his services as a burglar.
In North Carolina, a promise to perform an illegal act cannot be valid consideration and therefore a contract can’t be formed. If Bilbo agrees to perform services as a “burglar” is that an illegal activity? Clearly if I were to contract with somebody today to rob a house, that would be an illegal and invalid contract. “Burglar” in the context of the story however doesn’t appear to be an illegal activity. It seems to be more in the vein of a salvage operator or a scout or even an enemy spy, than an actual thief.
Once surrounded by goblins in the caves of the Misty Mountains and he decides he really doesn’t want to be a burglar anymore, can Bilbo terminate the contract? Since this is a service contract, the dwarves cannot force him to continue as his burglar. Only where a performance is unique will a court force a person to comply with specific performance. Presumably, there are other burglars in Middle-Earth (and ones probably more experienced than Mr. Baggins). Bilbo of course would forfeit any right to his 1/14th share, but the most the dwarves can get is monetary damages. The damages they could recover would be the expense of getting a new burglar and any damage that delay would take, for example, if some enterprising young dragonslayer killed old Smaug and t ook the treasure while the dwarves were still mucking around looking for a replacement burglar.
–Bradley A. Coxe is a practicing attorney in Wilmington, NC with Hodges & Coxe PC who specializes in Personal Injury, Medical Malpractice, Homeowner's Associations, Contract and Real Estate disputes and all forms of Civil Litigation. Please contact him at (910) 772-1678.