Lawyer Pens Detailed Analysis of 'Hobbit' Contract Between Bilbo and Dwarves

If you’re setting out to steal from a dragon, always read the fine print.

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James Daily, a lawyer and co-author of The Law and Superheroes, has set his sights on the contract between Bilbo Baggins and the band of dwarves in Peter Jackson's The Hobbit: An Unexpected Journey.

In a piece published in Wired, Daily tackles the specifics of the contract, which is considerably longer on film than in J.R.R. Tolkien’s book, and sees Bilbo retained as a burglar on the dwarves' journey to Smaug's lair. As it turns out, the contract is solid legal writing and contains only minor errors, according to Daily.

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In the book, the terms of the contract are as follows:

“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.”

The film version follows those terms closely, allowing Bilbo to have 1/14th of the journey's profits. But in addition, it specifies that no member of the company can take treasure for his own. Instead, all items will be tallied at the end and divided up equally.

“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," it reads. "Then, and only then, will the Burglar’s fourteenth share be calculated and decided.”

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[Warning: Minor spoilers ahead for those who have not read The Hobbit.]

Daily speculates this could cause trouble for Bilbo, who in the book takes the prized Arkenstone, surmising it’s value is equivalent to the 1/14th share he is owed. If Bilbo does this in the movie, he would be in breach of contract.

“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,” Daily writes.

And what does this mean for the One Ring Bilbo picks up along the journey and uses on multiple times during the adventure? Daily thinks that under the contract, Bilbo would be allowed to keep the ring, as there is a clause stating he can procure equipment needed for his duties:

“Specialist equipment required in the execution of duties in his professional role as Burglar shall be purchased, procured, purlioned [sic] or obtained by Burglar, by whatsoever method Burglar sees fit.”

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The contract also contains a confidentiality clause, which Daily says is so restrictive that Bilbo wouldn’t be allowed to share details of anything he learned on the journey. There goes that publishing deal he wanted for his tell-all memoir, There and Back Again.  

Among other unusual mandates:         Disputes arising under the contract must be debated in Dwarvish.

Specifying a language for debate is unusual in the U.S. but is more common with international contracts. Still, that puts Bilbo at a disadvantage as a Hobbit.

Daily concludes the contract is “is pretty well written” and praised Hobbit “prop-maker and artist Daniel Reeve on a strong piece of work.”

Daily worked from a replica available for purchase and assumed that the Shire is analogous to pastoral England, which would have practiced contract law similar to today’s.