Table of Contents

1.0 Question 1.............................................................................................2

1.1 What World Trade Organization (WTO)?............................................2
1.2 Advantage of WTO...............................................................................2
1.3 Disadvantages of WTO........................................................................3
1.4 The Procedures of WTO Dispute Settlement Process..........................4
2.1 Question 2 (A)......................................................................................6
2.2 Question 2 (B)....................................................................................10
3.0 Appendix............................................................................................13
4.0 Bibliography.......................................................................................14

1.0 Question 1
1.1 What World Trade Organization (WTO)?
World Trade Organization (WTO) is only one of the global international organizations
that deal with the rules and regulations of international trade between nations at a
global or near-global level. WTO mainly is about negotiated the trade agreements,
settle trade disputes between governments and organizes trade negotiations. Besides,
it operates a system of trade rules which provide a place for them to settle trade
disputes. The WTO was born out is to negotiate and to try to sort out the trade
problems they face with each other. For example, when countries have faced trade
barriers and wanted them lowered, the negotiations may help them to liberalize trade.
But the WTO is not just about liberalizing trade, and in some circumstances its rules
support maintaining trade barriers. For example, WTO is to protect consumers or
prevent the spread of disease. Besides, WTO is an international organization that with
the purpose of help to regulate international trade and encourage free trade by
persuades countries to eliminate import tariffs and other barriers that stop or prevent
free trade. According to World Trade Organization, the goal of WTO is to help
producers of goods and services, exporters, and importers conduct their business.

1.2 Advantage of WTO

There are some advantage of WTO which are to improve the standard of living of
people in the country, more choices for consumers, increase productivity, utilize
resources, protect environment, and help countries develop and so on. WTO helps to
lower down the trade by negotiation so that the living cost decrease. WTO help in
lower down production cost as the material that import from other country become
cheaper due to the free trade agreement. Due to the rules and regulation of free trade
and negotiation, more products can be import and exports. More trade between
countries can be done. Consumers can have variety choices to choose the products.
The price of the product become cheaper as there is elimination of taxes on the
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products. When having free trade, local firm face more competitors, firm will try to
lower down their cost to compete with competitors. Consumers will gain the benefits
as the product cost decrease. To fulfill the needs and wants of consumers, local firm
will increase their productivity and provide goods and services to consumers. Some
firm will increase their productivity for exports their products to other countries.
WTO helps firm utilize their resources as they can use their resources to produce
variety products. Country has a competitive advantage to product their product. So
that firm can have their own product to produce, so that firm can utilize their
resources and produce products. WTO brings peaceful to the country. Sales person are
usually willing to help and provide goods and services to their customers. Customers
only receive the goods and services from sales person. There will no fight and
argument between each other. WTO helps to increase employment. Trade can helps
country boosts economic growth and increase jobs for local people. As WTO helps to
increase productivity, firms need many workers to help in production. WTO helps
country to get trade with other country. Other country might need employee as well.
There will have many employments in the countries.

1.3 Disadvantages of WTO

WTO also will bring disadvantage also. WTO will make the country full of
foreigners and local people might be face unemployment. Local people have to
compete with foreigners to get a work. Country might be not safe because of
terrorists. To get a real global security, country must have their international
agreements that respect local people rights to democracy and promote global justice.
WTO damages natural environment also, firm may discharge their water or air
unethically and did not follow the rules and regulation that set by government.

1.4 The Procedures of WTO Dispute Settlement Process

World Trade Organization (WTO) is responsible for implementing and enforcing

the rules of international trade between nations. The rules themselves are found in a
wide-ranging collection of WTO agreements, including the General Agreement on
Tariffs and Trade, the General Agreement on Trade in Services, and the Agreement on
Trade-Related Aspects of Intellectual Property Rights. Each of these agreements has
three main objectives which is to help trade flows as freely as possible, to achieve
further liberalization gradually through negotiation, and to set up an impartial means
of settling disputes. Besides, the Understanding on Rules and Procedures Governing
the Settlement of Disputes (the Dispute Settlement Understanding or DSU) is
governed the WTO's dispute settlement process. This is a unified process that applies
to all disputes arising under the WTO agreements. The DSU has the sole authority to
establish panels of experts to consider the case, and to accept or reject the panels
findings or the results of an appeal. It monitors the implementation of the rulings and
recommendations, and has the power to authorize retaliation when a country does not
comply with a ruling.
The first stage of dispute settlement process is consultations which carry up to 60
days. Before taking any other actions, the countries in dispute have to talk to each
other to see if they can settle their differences by themselves. If they fail to do so, they
can ask the WTO organs to mediate or try to help in any other way.
The second stage is the process which they carry up to 45 days for a panel to be
appointed, and 6 months for the panel to conclude. If a consultation fails, the appeal
country can ask for the panel to be appointed. The country on trial can block the
creation of a panel once, but when the DSB meets for a second time, the appointment
can no longer be blocked unless there is a consensus against appointing the panel. The
panel is helping the DSB make rulings or recommendations. The conclusions make by
the panel are difficult to overturn, because the panel's report can only rejected by
consensus in the DSB, . The findings make by the panel have to be based on the
agreements cited. In additional, the final report of panel should give to the parties into
the dispute within six months. If the cases is urgency which including those

concerning perishable goods, the deadline to given final report is shortened to three
months.
In the agreement, there are describes the detail of how the panels are work. The
main stages before the first hearing is each side of the dispute presents its case in
writing to the panel. Following step is the first hearing, which is hearing the case for
the complaining country and defense. The complaining country and the responding
country announced the interest that they have in the dispute; make their case at the
panel's first hearing. In order to rebuttals, the country involved need to submits
written rebuttals and present oral arguments at the panel's second meeting.
Furthermore, the panel may consult experts or appoint an expert review group to
prepare an advisory report if one side raises scientific or other technical matters. From
there, first draft is submit by the panel which describe the argument sections and
factual of its report to the two sides, and giving them two weeks to comment. This
report does not include findings and conclusions. The panel then submits an interim
report, including its findings and conclusions, to the both sides and giving them one
week to ask for a review. The period for ask a review must not exceed two weeks.
During that time, he panel may hold additional meetings with the both sides.
Finally, a final report is submitted to the both sides three weeks later, it is
circulated to all WTO members. The panel decides and measure the disputed trade
does break a WTO agreement or an obligation and may suggest how this could be
done. Besides, the approximate periods for each stage of the dispute settlement
procedures are provide in Table 1.1.

2.1 Question 2 (A)

Discuss whether there is a valid contract formed between Letty and Dominic.
Based on the case above, there are actually two parties involved which is Letty and
Dominic. On 1st June 2015, Dominic received an email from Letty offer him 1 tonne
of high quality flour for RM20,000. Dominic was interested by the offer. Dominic
intended to accept it but just keep silent and assumed that he is already secured the
contract. After one month, Dominic communicated the acceptance to Letty about he
accepted Lettys offer dated 1st of June concerning the sale of 1 tonne of flour with
RM20,000. However, Letty had already sold the flour to third party, Mr. Shaw.
In this case, it is not a legally binding agreement between two parties. Under
Section 2(a) of Contract Act 1950 stated that: when one person signifies to another
his willingness to do or to abstain from doing anything, with a view of obtaining the
assent of that other to such act or abstinence, he is said to make a proposal. 1 In our
case, Letty is the proposer and she is making an offer to Dominic for 1 tonne of high
quality flour for RM20,000. In the case of Carlill v Carbonic Smoke Ball Co. (1892),
the court held that the newspaper advertisement was held by Carbolic Smoke Ball Co.
Ltd was an offer to the world and Mrs. Carlill had accepted the offer by purchasing
smoke ball and taking the remedy. Based on the case above, an offer must be a
definite promise so that the contract can be bound. In our case, Letty has promised to
offer Dominic 1 tonne of high quality flour for RM20,000 once she receives the
acceptance.
Next, under Section 69 of Restatement Second of Contracts provides that: (1)
Where an offeree fails to reply to an offer, his silence and inaction operate as an
acceptance in the following cases only: (a) Where an offeree takes the benefit of
offered services with reasonable opportunity to reject them and reason to know that
they were offered with the expectation of compensation. (b) Where the offeror has
stated or given the offeree reason to understand the assent may be manifested by

Contract Act 1950 Section 2(a)

6

silence or inaction, and the offeree in remaining silent and inactive intends to accept
the offer. (c) Where because of previous dealings or otherwise, it is reasonable that the
offeree should notify the offeror if he does not intend to accept. 2 In our case, Letty, as
an offeror never had a business dealing with offeree before. Furthermore, offeror
never stated and let offeree knows that silence can be considered as acceptance.
However, Dominic, as an offeree intended to accept the offer with silence and
assumed he already recurred the contract. Therefore, the contract is not binding
between these 2 parties.
There is a case of Felthouse v Bindley (1862) under acceptance by silence. On
this case, Felthouse is making an offer to buy his nephews horse for 30 through
postage. If the nephew keeps in silent which means the nephew will accept the offer
by Felthouse. However, Bindley, as Felthouses nephew does not reply Felthouse.
Therefore, the horse will consider as Felthouse. The court held that, the nephew had
not communicated his acceptance of the offer. Therefore, there is no contract existed
and Felthouse had no claim. In our case, Dominic intended to accept it but just keep
silent and assumed that he is already secured the contract. The contract between Letty
and Dominic did not stated there as silence can considered as accepted the offer. The
offeror cannot stipulate in the offer that silence or no communication will be deemed
as acceptance.
Under Section 4(1) provides that: the communication of a proposal is complete
when it comes to the knowledge of the person whom it is made. 3 The acceptance by
promise needs to communicate to the promisor. It is important because the promisor
can always revoke or cancel his or her offer there is an acceptance. In our case, Letty
is the promisor. She is making an offer to Dominic for 1 tonne of high quality flour
for RM20,000. Letty can revoke the contract before she receives the acceptance from
Dominic.
Besides, under Section 5 provides that: 1) A proposal may be revoked at any time
before the communication of its acceptance is complete as against the proposer, but

2
3

Restatement Second of Contracts

Contract Act 1950 Section 4(1)
7

not afterwards. 2) An acceptance may be revoked at any time before the

communication of the acceptance is complete as against the acceptor, but not
afterwards. From the section above, we can clearly know that the proposal may be
cancelled any time before the offeror send the offer to the offeree. On the other hands,
offer may be also cancelled any time before the offeree send the letter of acceptance.
Next, an offer may be withdrawn at any time before acceptance is complete. Under
Section 6(a), a revocation of offer must be communicated in order to be effective. In
general, an offer can terminate 1) When rejected by the offeree. 2) When the offeree
made a counter-offer. 3) On the death of either the offeror or the offeree before
acceptance. 4) By non-acceptance within the time stipulated for acceptance, or within
a reasonable time. 5) When revoked before acceptance.4 In our case, Letty, as an
offeror is free to withdraw the offer when revoke before acceptance.
There is a case under revocation of offer; it was known as Dickinson v Dodds
(1876). The defendant makes an offer to sell his house for 800 to the claimant and
promised the claimant to keep the offer open until Friday. However, the defendant
was accepted an offer from third party and he was sold his house to third party on
Thursday. The claimed was so being informed on that day. Nevertheless, the claimant
sends the letter of acceptance to defendant on Friday morning. In this case, the offer
had been effectively revoked. The court held that there is no contract existed between
two parties because the offeror can withdraw the offer any time before acceptance
although the offer was expressed as open until Friday. In our case, Letty is free to
withdraw before the acceptance although she never mentioned about when she will
closed her offer. There is not valid contract between Dominic and Letty.
In our case, the contract is made through mail and abides under postal rule. Under
postal rule, it is stated that acceptance by post will be effective when the correctly
addressed letter is put into the post box or handed to the person who is authorized to
receive the mail or letter, although the offeror did not receive the letter. 5 In our case,
Dominic received an offer from Letty through mail about 1 tonne of high quality flour

4
5

Contract Act 1950 Section 6(a)

Postal Rule
8

for RM20,000, but Dominic had communicated the acceptance to Letty after one
month which is 1st of July 2015. Now, there is not a binding contract between
Dominic and Letty. The fault occurs is because Dominic did not inform Letty about he
is interested the flour and accepted Lettys offer within a reasonable time.
There is a case of Adams v Lindsell (1818) under postal rule. According to this
case, defendant and plaintiff were involved in the sale of wool. On 2 nd of September,
the defendant was made an offer to sell his wools and asked the plaintiff to reply by
letter. However, the letter which contained the offer was wrongly addressed and
therefore caused plaintiff did not receive the letter until 5 th of September. Due to
reason of delay, the defendant did not receive a letter of acceptance from plaintiff until
9th of September. 9th of September is actually two days later than the defendant
expectation. Therefore, on 8th of September, the defendant had sold the wool to the
third party. The judge claimed that there was indeed a contract in existence once the
letter of acceptance had been post or sent before the sale of the wool to the third party
although the defendant did not receive the letter. Based on this case, the defendant
was liable in breach of contract. On this case, the acceptance of offeree is effective
once the letter of acceptance is placed in the control of the post office such as it is
placed in a post box or handed to an officer of the post. In our case, the acceptance of
Dominic is not effective because he is communicated the acceptance through mail and
there is not within a reasonable time to inform Letty. Letty was sold the flour to third
party, Mr. Shaw before she accepts the acceptance from Dominic. Therefore, there is
no a contract in existence between Dominic and Letty.
In conclusion, there is not valid contract formed between Letty and Dominic
because silence as acceptance of an offer is not sufficient to create a contract.
Furthermore, it is not a reasonable time for Letty to receive the acceptance from
Dominic. Therefore, Letty is free to withdraw the offer and sell the flour to the third
person.

2.2 Question 2 (B)

Analyze on the chances of Dominic succeeding in his claim against Letty.
There is no chance for Dominic successful to make his claim against Letty.
Based on the situation above, Dominic has not made a clear statement that he wants to
buy the product from Letty. Besides that, off-silent is not an acceptance.
An offer or proposal is necessary for the information of an agreement. Section
2(a) of the Contracts Act 1950 stated that "when one person signifies to another his
willingness to do or to abstain from doing anything, with a view to obtaining the
assent of that other to the act or abstinence, he is said to make a proposal". 6 In this
statement, "proposal" has the same meaning as "offer". Besides that, under Section
2(c) of the Contracts Act 1950, "the person making the proposal is call promisor and
the person accepting the proposal is called the promisee". 7 Under the Contracts Act
1950 and English law, a proposal or offer is something which is capable of being
converted into an agreement by its acceptance. A proposal must be a definite promise
to be bound provided certain specified terms are accepted. The promisor (sometimes
also known as the "offeror") must have declared his readiness to undertake an
obligation upon certain terms, leaving the option of its acceptance or refusal to the
offeree, the person to whom the offer is made.
Others than that, Section 4(1) provides that "the communication of a proposal
is complete when it comes to the knowledge of the person whom it is made." 8 The
acceptance by promisee needed to be communicated to the promisor. This is important
because the promisor can always revoke (i.e cancel) his offer before is an acceptance,
but not after. However, Section 4(2) states that: "the communication of an acceptance
is complete when 1) These have been against the proposer, when it is put in a course
of transmission to him, so as to be out of the power of the acceptor. 2) As against the

6
7
8

Contract Act 1950 Section 2(a)

Contract Act 1950 Section 2(c)
Section 4(1)
10

acceptor, when it comes to the knowledge of the proposer". 9 Therefore, an offeror

cannot stipulate in the offer that silence or no communication will be deemed to be
acceptance.
The classic case of off-silent not acceptance is Felthouse v Bindley (1862).
Felthouse by letter offered to buy his newphewhorse for 30. He offered to purchase
the horse and said if I don't hear from you by the weekend I will consider him mine.
The nephew did not reply, but ordered Bindley, the auctioneer, who was engaged to
sell the horse to withdraw the horse from sale. By error, the auctioneer, Bindley,
included the horse in the sale and the horse was auctioned. Felthouse sued Bindley for
the loss. The court held that, as the nephew had not communicated his acceptance of
the offer, no contract existed and Felthouse had no claim.
Another example was case of Vogt v. Madden (1985). In the case, the fact is
that the plaintiff and defendant had an oral sharecrop agreement for the year in 1979,
and they renewed the agreement for the year in 1980. Under the agreement, there are
certain expenses were hold by the plaintiff. Besides, others of the agreement were
shared equally between the parties and the profit of crops grown would be divided
equally between plaintiff and defendant. The plaintiff filed suit the sharecrop
agreement in 1981 and sought recovery the share expenses of the defendant in the
year of 1979 and 1980. At the end, the court held that the exception arising from the
previous dealing between the parties does not apply. Their dealings were reached by
express oral agreements. There was no automatic understanding in the second contract
and jury do not believe that the previous transaction had given the benefit that
Madden to accept the Vogts offer in the express agreement. So without any special
exception it is a general rule of law that silence or inaction does not constitute
acceptance of the offer.
Another case that can apply is Dickinson vs Dodds in year 1876. The situation
fact is on Wednesday, June 10, 1874 Dodds delivered Dickinson a memorandum
which offer to sell a specified piece of land for 800 pounds with the offer open until
9am on Friday. On Thursday afternoon Dickinson learned that Dodds had offered and
9

Section 4(2)
11

agreed to sell the land to a third party. Dickinson wrote a note accepting the offer and
delivered it to his home at 7am on Friday morning before the deadline. But, Dodds
stated that he had already sold the land to another party the previous day. The issue
happens when a promise to hold an offer open is binding where the other party does
not accept until after he learns that the offeror has already conveyed the property.
From the case situation, Letty has sold the flour to the third party who is Mr Shaw.
Another case related is Stevenson v Mclean (1880). Where the case has
mentioned that, the defendant wrote to plaintiff which offered to sell iron at 40
shillings a ton with net cash. Plaintiff sent a telegram asking if he could have credit
terms and asking whether defendant would accept 40 shillings for delivery over two
months, or if not, what time defendant would give. Four hours later, there had no
reply from the defendant. Plaintiff telegraphed to defendant which accepting the
original offer. But, when plaintiff find defendant it had already sold the iron
elsewhere. Therefore, the plaintiff sued the defendant for breach of contract and the
defendant argued that the plaintiff's telegram was a counter-offer so the plaintiff's
second telegram could not be an acceptance.
In conclusion, we can conclude that if Dominic really wants to sue Letty, he will
totally lose on claim against Letty. It is because there is not a valid contract between
Dominic and Letty.

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3.0 Appendix
60 days

Consultations, mediation, etc

45 days
6 months
3 weeks
60 days
Total = 1 year
60-90 days
30 days
Total = 1 year 3 months
Table 1.1

Panel set up and panelists appointed

Final panel report to parties
Final panel report to WTO members
Dispute Settlement Body adopts report (if no appeal)
(Without appeal)
Appeal report
Dispute Settlement Body adopts appeals report
(With appeal)

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4.0 Bibliography
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Acceptance by Silence. (2003, September). Retrieved April 26, 2015, from Justia:
https://www.justia.com/trials-litigation/docs/caci/300/310.html
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Cases on Formation of a Contract Offer. (n.d.). Retrieved May 6, 2015, from Law
Teacher: http://www.lawteacher.net/cases/contract-law/agreement-cases.php
Dickinson v Dodds (1876). (n.d.). Retrieved April 26, 2015, from E-Lawresources:
http://www.e-lawresources.co.uk/Dickinson-v-Dodds.php
Dickinson v. Dodds. (n.d.). Retrieved May 6, 2015, from Lawnix:
http://www.lawnix.com/cases/dickinson-dodds.html
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Global Exchange: http://www.globalexchange.org/resources/wto/oppose
Jacobs, C. J. (2011). Principles of Malaysian Business Law. Malaysia: Pearson
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https://www.wto.org/english/thewto_e/whatis_e/tif_e/utw_chap3_e.pdf
Understanding on Rules and Procedures Governing the Settlement of Disputes. (n.d.).
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Trade
Organization:
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What is the WTO? (n.d.). Retrieved May 8, 2015, from World Trade Organization:
https://www.wto.org/english/thewto_e/whatis_e/whatis_e.htm

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