Over at Wired, a lawyer named James Daily has done a quick (to the extent that lawyers do anything quick) analysis of the legal contract drawn up between Bilbo and the dwarves in The Hobbit.  It’s a fun read for those interested in the intricacies of law, and manages to avoid turgidity. For the most part, Daily concludes, the contract appears solid, but he does fund a possibly significant hole:

The one thing that leaps out at me about this contract is that it doesn’t contain a choice of law clause.  Such a clause allows the parties to specify what jurisdiction’s law will govern the contract. This is particularly useful when multiple jurisdictions may potentially apply. The area of the law that deals with figuring out which court has jurisdiction and which law applies is known as conflict of laws.

Conflict of laws is a complex subject. Typically it is a stand-alone course in law school. So we won’t go into too much detail here, but suffice to say that arguably both the law of the Shire and the law of the Dwarven Kingdom could conceivably apply to this contract. Some of the factors that a court might consider include:

• The parties are a Hobbit of the Shire and a group of Dwarves.
• The contract was signed in the Shire.
• The contract concerns services to be performed in the Dwarven Kingdom.
• The most likely source of the breach of the contract occurs in the Dwarven Kingdom.

Since the applicable law is debatable, this is precisely the kind of case in which a choice of law clause makes sense, so its absence is notable.

This is the sort of question that leads to other questions:

1. What Dwarven Kingdom? At the signing of the contract, there is no Dwarven Kingdom to have jurisdiction. Thorin is a King in exile, and the re-establishment of the Kingdom Under the Mountain is a result of the Adventure that neither party can reliably foresee. Unless the Dwarven realm of the Iron Hills counts as a Dwarven Kingdom, but I believe that the Iron Hills and Erebor were founded at the same time, and not one as a successor to the other. Then again, Dain Ironfoot, the ruler of the Iron Hills, is universally accepted as Thorin’s successor.
2. What Shire Law? The Shire has a Mayor, and Shirrifs, and a postal services, and Bilbo’s journey does seem to create some issues about the ownership of Bag-End, so they obviously have some kind of legal framework. I suspect that a good bit of it is a common-law tradition deriving from the law of the Kingdom of Arnor, to which the Shire was initially subject. The Thain of the Shire held a kind of feudal sovereignity granted by the King of Arnor. Of course, at the time of the contract, there is no such Kingdom anymore, nor has there been for some time. The Shire is in this sense a rump state, and I don’t know how much respect the laws of such a small, unknown place commands. It’s hard to see Thorin willingly submitting to that Law.
3. What About the Lakemen? If the Dwarves have respect but no regime, and the Hobbits regime but no respect, the men of Esgaroth upon the Long Lake near Erebor have both. In fact, you could make a pretty fair case that the Lake-Men have local jurisdiction, inasmuch as theirs is the only jurisdiction anywhere near the Lonely Mountain. But it’s a jurisdiction of Men, not of Dwarves or Hobbits (even if Hobbits are essentially of Man-Kind). The Men of the Lake certainly feel as though they have a claim upon the treasure of Smaug.

I have no good answers to these questions. Contemplating Tolkein sometimes bears resemblance to contemplating the Divine Mysteries (a comparison that would have gratified the old master, I am sure).