James Daily writes intensive, witty, and very astute analyses of the legal issues raised in feature films. I love his piece on the 5-foot long contract between Bilbo Baggins and the dwarves in “The Hobbit.” Here’s a sample on the very important legal principle of “consideration” (which means that there has to be some sort of exchange).
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.
This is important in this case because of the use of the defined term “Burglar.” Contracts to do something illegal are ordinarily unenforceable (e.g. collecting on an illegal gambling debt). But here what matters is not that the parties used the word ‘burglar’ but rather what sort of meaning they assigned to that defined term. As we shall see, the contract doesn’t require Bilbo to do anything illegal (or at least not obviously illegal), and so the contract will probably not fail for use of a questionable term.
And then there are the liability waivers, the non-disclosure agreement, and the provision for binding arbitration! The write-up on the tax consequences of Clark Kent’s decision to leave The Daily Planet to be a blogger is pretty good, too!