General Average

• The principle of general average may be said simply to be: “That which has been sacrificed for the benefit of all shall be made good by the contribution of all”.

• The object of general average is to ensure that the owner of a vessel or cargo who has incurred an expenditure or suffered a sacrifice of his property in order to extricate the vessel (and consequently the cargo) from a perilous position receives a contribution to his loss from all those who have benefited from the action.

• A general average loss is a partial loss incurred through a deliberate act performed with the intention of preserving all the property involved in a voyage from a danger which threatens them all. General average losses are equitably shared by all the parties to the “common maritime adventure” (the voyage being the “maritime adventure”), each party contributing in proportion to his share of the total values involved.

• In theory, whenever a ship owner deliberately incurs an expenditure, no matter how small, which results in the ship and its cargo being preserved from a peril (such as a fire on board), there is a general average act and the owners of the cargo saved by it become liable for a contribution to the ship-owners costs. In practice, however, general average is not always declared, since the calculation and collection of all the due contributions could, depending on the nature of the cargo, involve a huge amount of time, effort and expense.

• Following a general average act a ship will often make for a “port of refuge”, and it is in these emergency port calls that, very often, the majority of the general average expenditure is incurred.

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FUND – 1992