Bilbo enters into a lengthy contract with the dwarves, which is written on scrolls at least five feet in length. Beneath all the legal jargon and the seemingly endless clauses and small print, the basic provisions are pretty straightforward. Under the terms of the contract Bilbo will receive cash on delivery, up to and not exceeding one-fourth of all total profits made (if any). Furthermore, the dwarves agree to pay all traveling expenses as well as any funeral expenses that may arise.

The contract's legalistic language can't hide the fact that Bilbo's forthcoming quest will be a very dangerous one indeed. Otherwise, why else would provision be made for funeral expenses? The relevant provision of the contract makes clear such expenses will be defrayed—paid for—"if the occasion arises and the matter is not otherwise arranged for." This would appear to suggest that Bilbo could well die suddenly on his journey, and at any time.

From the terms of the contract, we can also reasonably surmise that Bilbo's projected journey will be quite lengthy. For why else would traveling expenses need to be an issue?

A long, hard, potentially perilous journey, but with a generous financial reward at the end of it, should Bilbo be successful (and still be alive). All things considered, it's quite a good deal.