Faustian bargains are at the heart of Shrek Forever After, the final chapter in the Shrek franchise, and those bargains raise interesting questions for the law of contract (even as the marketing of the film has raised others).

Like Australia (and in many ways even more than the obvious Paper Chase) Shrek Forever After is really A Movie About Contract Law!

Warning: plot spoilers When the movie begins, our hero, Shrek, is suffering a classic mid-life crisis; he is dissatisfied with married life, and pining for the old days, when he was a terrifying ogre rather than a domesticated tourist attraction. Rumpelstiltskin, the evil and manipulative magic deal-maker, offers Shrek the opportunity to spend a day as a real ogre again, in return for another day from Shrek’s childhood. The YouTube clip at the top left is the scene in which Rumpelstiltskin cajoles Shrek into agreeing. Having signed on the dotted line, Shrek is transported into an alternate reality. At first, he enjoys being fearsome one again. But the catch – and there’s always a catch – is that the day Rumpelstiltskin takes is the day of Shrek’s birth. This means that Shrek was not there to rescue Princess Fiona in the first movie; and her desperate parents, King Harold and Queen Lillian, turned to Rumpelstiltskin, and signed over the kingdom of Far Far Away to him in return for having all of their problems disappear. They disappeared, and the kingdom is now subject to Rumpelstiltskin’s tyrannical rule. It is a world where ogres are hunted criminals and Fiona leads the resistance; and when Shrek’s day as a frightening ogre is over, it will all be as if he had never existed. However, Donkey reveals to Shrek a sneakily-hidden exit clause in his contract with Rumpelstiltskin: if Shrek receives “True Love’s First Kiss”, the contract will be rendered null and void. So, the third act of the movie turns on Shrek’s efforts to get Fiona to fall in love with him and kiss him before the morning.

Just with the contracts at the heart of The Merchant of Venice or Peter Greenaway’s wonderful The Draughtsman’s Contract, the plot of this movie also turns on cultural assumptions about the binding nature and literal enforcement of written contracts – even dubious contracts. In particular, it is accepted that literal compliance by Rumpelstiltskin with the terms of contracts is sufficient to discharge his contractual obligations, even where that literal compliance is unforeseen by the other parties to the contracts. Thus the disappearance of the king and queen does indeed ensure that all of their problems disappear; and the taking of the day of Shrek’s birth literally complies with the terms of his bargain.

The two bargains at issue in the movie have the generally assumed form of contracts: they’re long; there are lots of clauses, seals, and small print; and, at the bottom, there are dotted lines upon which to sign. Moreover, they seem to satisfy the formal legal requirements. In both cases, there is agreement: Rumpelstiltskin makes offers which the king and queen, and Shrek, accept (even if, in the circumstances, as with The Godfather, these are offers they feel they couldn’t refuse, so that there was nothing akin to what My Cousin Vinny Gambini would call a counter-offer). Furthermore, in both cases, there is consideration: the king and queen’s kingdom of Far Far Away in exchange for the disappearance of their problems; and a day of Shrek’s childhood in exchange for a day as a scary ogre. And in both cases, there is intention to create legal relations: everyone plainly expects and intends to be legally bound.

The question of terms is a little less straightforward. On the one hand, there are various doctrines by which the Law of Contract adds terms. It is rather difficult to argue that further express terms should be added to the comprehensive written contract, and the circumstances do not seem to give rise to any terms implied at common law. Since Rumpelstiltskin is in the business of making magic deals, these could be consumer transaction governed by sale of goods and supply of services legislation, but since Rumpelstiltskin plainly has the skill he represented, it is unlikely that any implied terms are breached by his literal performance. Of course, there are some jurisdictions in which there a duty of good faith and fair dealing is implied in every contract. Where that is so, even an evil villain is not exempt from it. However, it is not clear to me that Rumpelstiltskin has actually breached such a clause.

On the other hand, there are various doctrines by which the Law of Contract removes terms, if they are unfair in various ways. But removing a term here or there is unlikely to affect the substance of the bargains which the king and queen, and Shrek, reach with Rumpelstiltskin. So, the applicable terms would seem to be those agreed in writing between them. And although terms and conditions often contain traps for the unwary, nevertheless, here, just as in Once Upon a Time in the West, it is the small print that provides Shrek with his exit clause.

The next issue is whether the contract is vitiated in any way. It is unlikely either that the misunderstandings under which the king and queen, and Shrek, entered into their contracts amount to a unilateral mistakes or that the anxiety which led to their signing the contracts amounts to duress or undue influence. There may very well be room for an argument on the basis of a doctrine such as substantive unconscionability, but the courts start from the proposition that parties are free to make their own bargains, and none of the usual triggers for unconscionability (dependence, reliance, imbalance of bargaining power) seem to be present on the facts of either transaction, so I’m not sure that an unconscionability argument would amount to anything. Nor do the contracts seem to be void for incapacity on the grounds of minority, unlike the prenuptial contract being litigated in Liar Liar.

If Shrek, and the king and queen, are to be released from their contracts with Rumpelstiltskin, they will have to argue that the contracts are void either for illegality or for infringing public policy. In criminal law, one consent to one’s death does not absolve another from murder, and as the highwaymen (in Everett v Williams (1725) rather than Plunkett and Maclean) found out to their cost, the law will not countenance a contractual performance that amounts to the commission of a crime (even where, as in Seven Samurai and The Magnificent Seven, audience sympathy is in favour of keeping such a contract). The interesting question of interpretation, of course, is whether taking the day of Shrek’s birth or making the king and queen disappear, amount to murder or some other species of criminal homocide!

In the end, the only real moral that can be drawn from the movie is the immortal advice given in Indecent Proposal: “How could you negotiate without me? Never negotiate without your lawyer. Never!”