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Bilbo Baggins' Contract

Posted on the 17 January 2013 by Charlescrawford @charlescrawford

Before the Internet how would we ever have been able to read a magnificent analysis by James Daily of the contract presented to Bilbo by the dwarves?

The contract in the book is short and to the point. The film version (for padding) is far longer and a lot more contrived. Not to mention slackly drafted at some points.

Thus:

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. And he 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.

There are several ways in which these contract terms 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.

Then there's this:

There are also a group of clauses dealing with disputes arising under the contract. This is an important part of many contracts. If you’re going to the trouble of creating a formal legal agreement, then you might as well contemplate what might happen if the deal goes bad. Somewhat anachronistically, the contract contains an arbitration clause:

Disputes arising between the Contract Parties shall be heard and judged by an arbitrator of the Company’s choosing

I say “somewhat anachronistically” because although arbitration has a long history in the common law — going back at least as far as 1609 — it was for centuries frowned upon by the courts. One early case, Vynior’s Case, held that mandatory arbitration clauses (i.e. requiring a party to a contract to submit to arbitration) were revocable. In other words, parties could submit to arbitration but only by ongoing, mutual agreement. It was not until the 1800s that mandatory arbitration really became acceptable in either England or the US. See, e.g., Burchell v. Marsh, 58 U.S. 344 (1854).

The other issue is that the clause allows the Company to choose the arbitrator. This is highly unusual and may actually invalidate the arbitration clause. In order to comport with due process, a mandatory arbitration agreement must, among other things, provide a neutral, impartial decision maker. Typically this is done by allowing the parties to jointly select an arbitrator or to have an impartial third party (such as an arbitration agency) select one.

Supremely good. Wise and funny - the ideal combination.

Note, by the way, that whereas Snow White stayed with seven dwarfs in the Tolkien world they are known as dwarves:

Almost all the names of the dwarves of Middle-earth are taken from the Icelandic saga of Völuspá.

According to Tolkien, the "real 'historical'" plural of dwarf is dwarrows or dwerrows. He once referred to dwarves as "a piece of private bad grammar" (Letters, 17), but in Appendix F to The Lord of the Rings he explains that if we still spoke of dwarves regularly, English might have retained a special plural for the word dwarf as with man. The form dwarrow only appears in the word Dwarrowdelf, a name for Moria. Tolkien used Dwarves, instead, which corresponds with Elf and Elves, making its meaning more apparent. The use of a different term also serves to set Tolkien's Dwarves apart from the similarly-named creatures in mythology and fairy-tales.

The enduring popularity of Tolkien's books, especially The Hobbit and The Lord of the Rings, has led to the popular use of the term dwarves to describe this race in fantasy literature. Before Tolkien, the term dwarfs (with a different spelling) was used, as seen in Snow White and the Seven Dwarfs. In fact, the latter spelling was so common that the original editor of The Lord of the Rings "corrected" Tolkien's dwarves to dwarfs

Now, out into the frozen wastes with the faithful hound, over snow by winter sown:

 


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