It has two main purposes:
(1) It enables them to defend against players suing them.
(2) It enables them to sue third parties who commit "tortious interference" (meaning: interfering with the contractual relationship between two other parties.) Yes Virginia, a contract can affect someone who didn't sign it. This is used to go after bot makers.
My favorite Huolon trick was to aggro him (by ranged attack) while be carried by an albatross, then kite him around the island. You don't take damage while you're being carried like that.