GENERAL AVERAGE Meaning and
Definition
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General average is a principle of maritime law that refers to a method of distributing losses and expenses incurred for the common benefit of a ship and its cargo during unforeseen events or emergencies at sea. When certain sacrifices or expenditures are made deliberately and reasonably in order to prevent a greater peril, all parties involved in the voyage must contribute proportionally to the resulting expenses.
In the context of general average, the term "average" does not refer to a common meaning of the word, but instead to an ancient term used in maritime law. The concept is rooted in the idea of sharing risks and losses equitably amongst all parties involved in a voyage. It applies when a voluntary act is undertaken, such as jettisoning cargo or using fire-fighting equipment, in order to save the remaining cargo or the whole vessel from a common danger, such as fire, piracy, or grounding.
The principle of general average requires that all parties, including the cargo owners, contribute a proportional share to cover the expenses or losses incurred during the incident. This proportion is determined by the total value of the voyage, and each party's contribution is calculated as a percentage of their respective interests.
General average is fundamental for promoting the welfare and safety of the maritime industry. It incentivizes cooperation and collective responsibility among all stakeholders by distributing the financial burden of emergencies fairly, which ensures that individual parties are not disproportionately burdened by the unforeseen risks and expenses encountered during a voyage.
Etymology of GENERAL AVERAGE
The term "general average" originated from maritime law and can be traced back to the Latin phrase "generalis avaria". In ancient Roman maritime law, avaria referred to "damage or loss to a ship, cargo, or freight". The concept of general average emerged from the principle of contribution, where all parties involved in a sea voyage would share the costs and sacrifices when certain extraordinary events occurred to protect the common interest. Over time, the phrase "generalis avaria" evolved into "general average" in English, and it continues to be used worldwide in the maritime industry.
