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Do you know what general average in simple terms is?
“General” – affecting or concerning all or most people or things, i.e. widespread. In our context affecting a ship and cargo (sometimes charterers too), this is those who are involved in a common marine adventure (e.g. a ship on a laden voyage No “X” from port A to port B).
“Average” – is a word to say a “loss”.
A well-accepted General Average (thereafter “GA”) definition: “All loss which arises in consequence of extraordinary sacrifice made, or expenses incurred for the preservation of the ship and cargo, comes within general average, and must be borne proportionally by all who are interested”.
Five components of a GA:
- An extraordinary sacrifice or expenditure
- Which is intentionally, and
- Reasonably made,
- Against a peril,
- In order to benefit the common venture
The vessel A was entering harbour X with a cargo of corn on board when she was hit by a violent squall. In order to save the ship and cargo, the master endeavoured to tie her up to the pier. In this, he was successful but, during the process of manoeuvring the ship and trying to save the cargo, extra personnel were required for assistance. An anchor and its cable were deliberately sacrificed for safety reasons, and some hawsers were also lost. The owners claimed a GA contribution from the cargo-owner. The court ruled that the actions of the master amounted to GA acts, for which the defendant (cargo interests) had to make a contribution as per GA Adjustment.
Please note, the GA act is usually ordered by the master or other crew member in authority over the vessel. You may refer to your insurance policy regarding cover of GA expenses or contact us — we will be happy to guide you.