Legal Definitions - average

In a legal context, the term "average" primarily refers to specific concepts within maritime law, dealing with losses and damages incurred during sea voyages. It also has a historical meaning related to feudal obligations.

General Average (GA)

General Average (GA) is an ancient principle in maritime law where all parties involved in a sea venture (the ship owner and all cargo owners) share proportionally in a loss or expense that was intentionally and reasonably incurred to save the entire voyage from an imminent common peril. This means if a sacrifice is made or an extraordinary expense is incurred to protect the ship, crew, and all cargo from a shared danger, the cost of that sacrifice or expense is distributed among everyone whose property was saved.

• Example 1: A large container ship carrying electronics, textiles, and perishable goods encounters a sudden, severe fire in its engine room. To prevent the fire from spreading and destroying the entire vessel and all cargo, the captain orders the crew to flood the affected compartment. This action successfully extinguishes the fire but unfortunately damages some of the electronics stored nearby due to water exposure.

  Explanation: The intentional flooding (a sacrifice) was made to save the entire ship and the rest of the cargo from total loss. The financial loss from the damaged electronics would be shared proportionally by the owners of the textiles, the perishable goods, and the ship owner, as they all benefited from the action that averted a greater disaster.

• Example 2: A bulk carrier transporting grain and machinery suffers a critical engine failure in a remote, dangerous stretch of ocean, drifting perilously close to a rocky coastline. To prevent the ship from running aground and being completely lost, the captain contracts an expensive specialized salvage tug to tow the vessel to the nearest safe port for repairs.

  Explanation: The significant expense for the salvage tug was incurred to rescue the entire ship and all its cargo from a common peril. This extraordinary cost would be apportioned among the ship owner and all the cargo owners (of the grain and machinery), as everyone's property was saved by the salvage operation.

Particular Average

Particular Average refers to an accidental, partial loss or damage to a ship or its cargo that is not intentionally caused to save the entire voyage. Unlike General Average, the financial burden of this loss falls solely on the owner of the damaged property, and it is not shared by other parties involved in the voyage.

• Example 1: During a transatlantic voyage, a sudden, localized squall causes a single container of furniture on the deck of a cargo ship to break open and its contents to be washed overboard. The rest of the ship and other cargo remain unaffected and reach their destination safely.

  Explanation: This was an accidental loss affecting only a specific part of the cargo. The owner of the lost furniture bears the entire financial loss, as it was not a sacrifice made for the common safety of the voyage; it was an isolated incident.

• Example 2: A refrigerated cargo vessel experiences a mechanical malfunction in its cooling system within one specific hold, causing a portion of its frozen seafood catch in that hold to spoil before reaching port. The rest of the ship, its other cargo holds, and its equipment remain fully functional.

  Explanation: The spoilage was an accidental, partial loss to a specific part of the cargo (the seafood in one hold). The owner of the spoiled seafood would bear this loss alone; it is not shared by other parties because it wasn't an intentional act to save the entire vessel or a consequence of a peril threatening the whole voyage.

Historical Note

Historically, "average" also referred to a service, often involving carriage or transport, that a feudal tenant owed to their lord. The exact nature of this service is not fully clear from historical records, but it represented a specific obligation within the feudal system.