This paper deals with respective changes in rail companies introduced with the Act on Enterprises {Official Gazette of the SFR of Yugoslavia No. 40/89) which from the legal aspect put the railways in the position of public services. By this the society has finally admitted the existence of public services with us. The railway is one of classical examples of public services. As such they are subject to contracting in passenger transport by a particular system which is not left to its dispositive of civil normative law but is also determined by cognitive rules making in specific. This paper provides a review of legal basis for contracting in passenger transport with rules putting the railways under obligation under given circumstances to conclude contracts for passenger transport. There follows a comprehensive review of liabilities of the railways for regular and safe passenger rail transport and the methods of redemption for damage in case of failure to provide a regular and safe passenger rail transportation.
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