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General average is a legal principle in Maritime Law providing that there is a proportionate contribution liability amongst the various interests involved in maritime venture, such as between the vessel, the cargo owners and the freight party (Baughen, 2002). General average in essence means general loss. General average has been considered to be a mutual insurance of the parties involved in a voyage that was developed before the emergence of a more formal marine insurance (Baughen, 2002). For instance, whenever a ship is faced with distressing circumstances and a sacrifice is made of any part of the lading for the preservation of the rest of the cargo, or for the safety of all property that is on board, a contribution has to be made towards the value of this sacrifice proportionately, and this contribution is called ‘general average’ (Oliver, 1995).
General average arises only where the sacrifice is made voluntarily, and where there is some sort of temporary or permanent benefit as a result of such a sacrifice; however, if the loss results from a direct casualty then no pretences can be made for a contribution from the rest of the interested parties, as the sacrifice has to be ‘made with an intention of saving the ship’ (Oliver, 1995: 322).
ReferencesOliver B,. (1995). The Law Summary: A Collection of Legal Tracts on Subjects of General Application in Business. 2nd Edition, Glazier, Masters & Company
Baughen S,. (2002) Shipping Law. 5th ed, Routledge