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1. What are the main differences between a corporation and partnership?

- A corporation is a separate legal entity from its owners. A partnership is a business entity with
individuals who share the risk and benefits of business.
- Corporations and partnerships differ in their structures. Corporations are more complex with more
people in the decision-making process. A partnership is a business in which two or more individuals share
- Corporations are more expensive and complicated to form than partnerships.
- In partnerships, the general partners are held liable for all company debts and legal responsibilities.
Corporations, on the other hand, do not hold individuals liable for the company's debt or legal obligations.
The corporation is considered a separate entity and therefore the corporation itself is responsible for
assuming all debts and legal fees, and the shareholders are not at risk of losing personal assets.

2. Explain how state powers are divided under the Constitution.

State powers of B&H are divided so that they dont obstruct authority and sovereignty of entities.
State has 3 separate entities: FB&H, RS and DB. On top of these three entities, there is a state of B&H with
its institutions and responsibilities in certain areas. According to the constitution, central institutions are
responsible for:
- foreign policy,
- foreign trade policy,
- customs policy,
- monetary policy,
- finances of the institutions and for the international obligations of Bosnia and Herzegovina,
- immigration, refugee, and asylum policy and regulation,
- international and inter-entity criminal law enforcement, including relations with Interpol,
- establishment and operation of common and international communications facilities,
- regulation of inter-entity transportation and air traffic control

3. Explain differences between business organization and association.

An association is a type of organization where people having common interests come together on a
platform. A business organization is an individual or group of people that collaborate to achieve certain
commercial goals.
Organization is a structure of people with well defined roles and functions whereas an association is a
group of people with common interests. Organization can be any entity from a small business to a world
body whereas an association is a collection of people forming an alliance for a particular purpose

4. List the main legal sources of B&H Business Law.

- Statutes/ Legislation
- Custom and Usage
- Judicial Decision
- Commercial treaty and agreement
- Professional Opinion of experts

5. How many types of companies exist under the Bosnian Legal System?
Bosnian law basically differentiates between business organizational forms which have the characteristic
of a partnership (drutvo lica is the general term for partnership) and those which have the characteristics of
a corporation (drutvo kapitala).
The corporate forms are:
limited-liability company (drutvo sa ogranienom odgovornosti - d.o.o.),
joint-stock company (dioniko drutvo- d.d.), which can be of the closed and open type, whose
shares are issued through public offer, and which meets one of the criteria provided for by law,
The partnership forms are:
general partnership (drutvo sa neogranienom solidarnom odgovornosti d.n.o.), and
limited partnership (komanditno drutvo k.d.), which can be an ordinary limited partnership
and limited stock partnership (komanditno drutvo na dionice), if its subscribed capital is distributed
to shares.

6. Define business law!

Business law encompasses all of the laws that dictate how to form and run a business. This includes all
of the laws that govern how to start, buy, manage and close or sell any type of business. Business laws
establish the rules that all businesses should follow.

7. Explain the importance of business law in modern society!

The importance of business law can be viewed on the following grounds:
- Protection of economic right
- Regulation and Systematization of business
- Commencement and development of business
- Enforcement of business Contract
- Delivery of Justices

8. Explain the main caracteristics of business law.

The main characteristics of Business Law are:
- Regulates industry, trade and commerce.
- Regulates every business activity of business community.
- Promotes rights and interest of business community.
- Create positive environment for the prosperity of business.
- With the increasing complexities and technologies of the modern business, the scope of business
law is automatically extended.

9. Identify various business areas that are regulated by business law!

Taxation Just like individuals, businesses are responsible for paying taxes on income that they earn,
and tax law determines how businesses pay taxes to the government.
Competition - Antitrust law is a field designed to promote business competition by curbing anti-
competitive behavior such as price fixing and monopolization.
Intellectual property law grants legal protection to the creators of various types of intellectual property,
which gives creators the right to profit from their work and take legal action agonist anyone who copies their
work without permission.
Employment law - govern how employers and employees interact.

10. Describe the limited liability shield provided by an LLC?

Limited liability means that a business owners personal assets are not on the hook for financial
obligations incurred by the business. The business owners personal assets are shielded from those
outstanding liabilities and in this way they are only at risk for what they invest into the business. Therefore,
an owners house, furniture, and personal bank account or not subject to the financial liabilities of their
company if it goes under.

11. What is a Limited Liability Company?

A limited liability company LLC (drutvo s ogranienom odgovornou d.o.o.) is a corporate
structure whereby the members of the company cannot be held personally liable for the company's debts or
12. What are the advantages of an LLC?
1. Separate Legal Identity - A limited company has a legal existence separate from management and
its members (the shareholders)
2. Members' liability is limited ("limited liability") - The members' only liability is for the amount
unpaid on their shares.
3. Protection of Company Name - The choice of company names is restricted and, providing a
chosen name complies with the rules, no-one else can use it.
4. Continuity - Once formed, a company has everlasting life. Directors, management and employees
act as agent of the company. If they leave, retire, die - the company remains in existence.
5. New Shareholders and Investors can be easily introduced - The issue, transfer or sale of shares is a
relatively straightforward process - although existing shareholders are protected via their "preemption"
rights and by company legislation that seeks to protect the interests of minority investors.
6. Taxation - LLC pay Corporation tax on their taxable profits. There is a wider range of allowances
and tax-deductible costs that can be offset against a company's profits. In addition, the current level of
Corporation Tax is lower than income tax rates.

13.What is the organizational structure of an LLC?

Organizational structure of an LLC is divided on
1. General Meeting which regulates
- Approval of the financial reports of the LLC;
- Election and removal of a director of the LLC;
- Appointment and removal of the companys external auditor, validation of the auditors findings
and opinions, establishment of the auditors remuneration and other terms of business with the
- Increase and reduction of share capital;
- Change of legal form or decision on termination of the company;
- Amendments to the Articles of Incorporation.
2. Supervisory board is mandatory for a limited liability company which has more than ten members
and a limited liability company which has share capital exceeding BAM 1 million (approximately EUR
511 thousand).
3. Managing Director(s) - The administration of the companys affairs and representation of the
company is carried out its management, led by the managing director (or directors).

14.Define general meeting of an LLC and its powers!

General meeting is the supreme body of an LLC and it comprises the companys members. Amongst
other matters, the following falls within the domain of the general meeting:
- Approval of the financial reports of the LLC;
- Election and removal of a director of the LLC;
- Appointment and removal of the companys external auditor, validation of the auditors findings
and opinions, establishment of the auditors remuneration and other terms of business with the
- Increase and reduction of share capital;
- Change of legal form or decision on termination of the company;
- Amendments to the Articles of Incorporation.
15. The major difference between a Joint Stock Company and Limited Liability Company is:
Joint Stock Companies can issue new shares, while LLC cant.

16.Joint Stock Company form of business organization is suitable for every type of business. Do you
agree? Give reasons.
Yes, I agree. Joint stock company is suitable:
- if large scale operations are to be undertaken
- when greater managerial skills are needed
- for an organization which intends to exist for a long period of time
- when greater capital is required
- when owners want to have limit the liability to control losses
- for both manufacturing and trading unit as well as service industry.
- for financial and corporate sector organization

17.What are the advantages and disadvantages of a Joint Stock Company?

Advantages: Disadvantages:
Huge Capital Difficulty in Formation
Large Scale Operation Excessive legal formalities
Limited Liability Separation of ownership and control
Continuity of Business Absence of personal touch
Easy Transfer of shares Delay in decision making
Democratic Operations Oligarchic management
Availability of Credit Speculation in shares
Easy to expand Neglect of minority interest
Better management Greater chance of fraud
Government Controls
18. What is the organizational structure of a Joint Stock Company?
General Meeting
Supervisory Board and Audit Committee
Management and Management Board

19.What are features of Joint Stock Company?

Artificial person
o Just like an individual, who takes birth, grows, enters into relationships and dies, a joint stock
company takes birth, grows, enters into relationships and dies.
Separate legal entity
o Being an artificial person, a joint stock company has its own separate existence independent of its
o It means that a joint stock company can own property, enter into contracts and conduct any
lawful business in its own name.
o It can sue and can be sued by others in the court of law.
o The shareholders are not the owners of the property owned by the company.
o Also, the shareholders cannot be held responsible for the acts of the company
Common seal
o A joint stock company has a seal, which is used while dealing with others or entering into
contracts with outsiders.
o It is called a common seal as it can be used by authorized officer at any level of the organisation
working on behalf of the company.
o Any document, on which the company's seal is put and is duly signed by any official of the
company, become binding on the company
Perpetual existence
o A joint stock company continues to exist as long as it fulfils the requirements of law.
o It is not affected by the death, lunacy, insolvency or retirement of any of its members
Limited liability
o In a joint stock company, the liability of a member is limited to the extent of the value of shares
held by him.

20. What is discharge of contract?

Discharge of a contract means that the parties are released from their obligations in the contract. A
contract can be discharged in 4 ways, by:
21. What is frustration?

If, from the very beginning, it is impossible to carry out what has been agreed then frustration
applies and the contract is void.

22. What is a force majeure clause?

In practice, many events which can cause frustration are dealt with in contract in clauses know as
force majeure clauses. These usually say that things like strikes, war, epidemics, government restrictions etc.
will allow the parties to suspend or cancel the contract. This is to avoid the time and expense of having to
go to court.

23. What is quantum meruit claim?

Quantum meruit means that a party should be paid as much as he has earned or deserved.
Example: A company makes a contract with an author to write a book. Payment is to be made when the
book is finished. However, the company decides not to publish the book before the author has finished
writing it. Under quantum meruit, the author could claim payment for the research and writing which he had
done before the book was cancelled.

24. What remedies are available for breach of contract?

Where one party breaches a contract then the other party may
Claim damages

Claim payment for quantum meruit

Raise a court action for specific performance

Raise a court action for an injunction

Raise an action for the agreed contract price

25. What is an injunction?

This is the opposite of specific performance. It is where a court orders one party not to break the
contract. It is often used to prevent people from breaking contracts of personal service.
Eg: an actress was prevented from travelling to England because she would be unable to work for the
American movie company which she had a contract with.

26. What are the different ways in which a contract can be discharged?
A contract can be discharged in 4 ways, by:
1. Performance
2. Agreement
3. Frustration
4. Breach

27. Explain Primary Responsibilities of Directors

As a director, the most basic form of diligence is regular attendance at board meetings and review of
the materials to be considered at the meeting. Directors also have an obligation to familiarize themselves
with the affairs of the corporation and to make inquiries and request additional information from the officers
and employees if they are not satisfied with the information provided to them.
28. Explain duties of Directors under Bosnian Business Law

In general, the management is subject to a wide range of different statutory duties, inter alia:

- to represent the company and manage the companys business;

- to ensure that all statutory fillings are made;

- to maintain accounts;

- to manage the book of shares;

- to convene the assembly meetings and determine the proposed agenda for such meetings;

- to set a date for: determining a list of company shareholders entitled to receive notice;
determining dividend amount; determining dividend payments; voting and other questions;

- to conclude loan agreements;

- to deal with other matters stipulated by the articles of association or by the contract

29. Define Liability of Directors under Bosnian Business Law

In general, although the company is liable to third parties for damage caused by its employees, it may
receive compensation from individual members of the board who caused damage, if they acted intentionally
or negligently, or if the damage was caused as a result of their misconduct.

The company will have to compensate the member of management for all founded expenses if he was
successful in such litigation, and the member of management can bring a claim against the company if it
does not comply with this obligation.

30. Sources of the terms of the employment contract

The court may imply a term from any of the following sources:

- Custom and practice;

- Works and staff rules;

- Collective agreements;

- Statute;

- Common law rights and duties of employers and employees.

31. Define employment contract

A contract of employment is a category of contract used in labour law to attribute right and
responsibilities between parties to a bargain. The contract is between an "employee" and an "employer."
32. Content of the employment contract

This statement must include:

The parties names;

The date when the employee started the job;

The date on which the employees continuous employment began. This may not be the same
as 2 above if, for example, the employee was already employed by the same employer but in
a different post. The length of continuous employment is crucial to rights relating to unfair
dismissal and redundancy, which are discussed below;

A note of any disciplinary and grievance procedures;

Full particulars of:

Pay entitlement;

Hours of work;

Any holiday entitlement and pay;

Any sick leave and pay entitlement;

Any pension rights (unless these are controlled by a statute which itself ensures notification);

Length of notice required to be given to and by the employee;

The title of the employees job and a brief description of what it involves;

If the job is not intended to continue indefinitely, the period for which it is expected to last,
or the date it is intended to end if it is for a fixed term;

The place(s) where the employee will be required to work

Any collective agreement directly affecting the job.

33. The common-law duties of the employee

To do their job with reasonable care and skill;

To obey all reasonable orders;

To act in good faith towards the employer.

Each of these duties is implied in the contract.

34. The law of tort: employers civil liability for industrial injuries
Two possible rights of action in tort may be open to an employee injured at work:

1. an action for breach of the employers common law duty of care;

2. an action for breach of statutory duty

35. The major differences between a Partnership and Limited Liability Company are:
The main difference between a partnership and an LLC is that partners are personally liable for any
business debts of the partnership -- meaning that creditors of the partnership can go after the partners'
personal assets -- while members (owners) of an LLC are not personally liable for the company's debts and

36. Distinguish between general partnership and limited partnership form of business organization.
A general partnership is a company with at least two persons who are jointly and severally liable for
the companys obligations.
Such a company may have more members, and they are all jointly and severally liable for the
company obligations with their entire property.
The company is established through a memorandum of association.
- The members contributions are of equal value and may include money, objects, rights and
provided services.
- They generally equally participate in the distribution of profit and in covering losses, as well as
managing of the company.
- A limited partnership is a partnership with no less than two members: a general partner and a
limited partner, although there may be more.
- These two types of members have different status within the company.
- General partners manage the company and are jointly and severally liable for the companys
obligations, with their entire property.
- Limited partners do not manage the company and are not liable for its obligations, i.e. they are
liable only up to the amount of their contributions.
37. What are the advantages and disadvantages of a Partnerships?
Easy to form
Availability of large resources
Better decisions
Flexibility in operations
Sharing risks
Protection of interest of each partner
Unlimited Liability
Lack of Harmony
No transferability of share

38. What is the organizational structure of a Partnerships?

- General Meeting
- Supervisory board
- Managing Director(s)

39. What are features of Partnerships?

- Two or more Members

- Agreement

- Sharing of Profit

- Unlimited Liability

- Separate Legal Existence

- Principal Agent Relationship

- Restriction on Transfer of Interest