Legal Definitions - general average loss

General average loss is a concept in maritime law that describes a specific type of financial loss incurred during a sea voyage. It occurs when a voluntary and intentional sacrifice is made of part of a ship or its cargo, or an extraordinary expense is incurred, specifically to save the entire venture (the ship and all remaining cargo) from an imminent and serious peril.

When such a sacrifice or expense is successful in preserving the voyage, the financial loss resulting from that action is then shared proportionally among all parties who benefited from the sacrifice. This means the ship owner and all cargo owners whose property was saved contribute to cover the loss. The principle ensures that no single party bears the full burden of an action taken to preserve the common good of the voyage.

• Example 1: Jettisoned Cargo During a Storm

  A cargo ship carrying various goods encounters an unexpected and violent storm. The captain determines that, to prevent the ship from capsizing and sinking, a portion of the deck cargo, consisting of several containers of electronics, must be thrown overboard. This action successfully lightens the ship, allowing it to stabilize and continue its voyage safely to port with the remaining cargo intact.

  How it illustrates the term: The value of the electronics intentionally jettisoned is a general average loss. The owners of the ship and the owners of all the *remaining* cargo (which was saved from potential total loss) would proportionally contribute to compensate the owner of the jettisoned electronics. This is because the sacrifice was voluntary, necessary, and successful in saving the entire venture.

• Example 2: Intentional Damage to Refloat a Stranded Vessel

  A large container ship accidentally runs aground on a sandbar in a busy shipping lane. The crew and captain assess the situation and realize that to refloat the vessel and prevent further damage or potential sinking of the ship and its cargo, they must intentionally overstress the ship's engines for an extended period, causing significant mechanical wear and tear. This maneuver successfully frees the ship, allowing it to proceed to port for repairs and cargo delivery.

  How it illustrates the term: The cost of repairing the intentionally damaged engines is a general average loss. This expense was incurred voluntarily and specifically to save both the ship and all the cargo from a more severe peril (prolonged stranding, potential total loss). Therefore, the ship owner and all cargo owners would share the repair costs proportionally.

• Example 3: Salvage Operation Costs for a Disabled Ship

  Mid-ocean, a bulk carrier suffers a catastrophic engine failure, leaving it adrift and vulnerable to severe weather. To prevent the ship and its valuable cargo of grain from being lost at sea, the captain contracts a specialized salvage tug to tow the disabled vessel to the nearest safe port for repairs. The salvage operation is costly but successfully brings the ship and its cargo to safety.

  How it illustrates the term: The substantial fees paid to the salvage company constitute a general average loss. These extraordinary expenses were voluntarily incurred to save the entire maritime venture (the ship and all its cargo) from an imminent peril (being lost at sea). Consequently, the ship owner and all the owners of the grain cargo would contribute proportionally to cover the salvage costs.