What is general average and what are the conditions that constitute general average?

Categories:

Industry Encyclopedia

Time of issue：

2023-07-14 11:31

"General average" refers to the special sacrifices and special expenses directly caused by deliberate and reasonable measures taken for common safety when ships, cargo and other property encounter common dangers during the same voyage ("Chinese People The Maritime Law of the Republic of China) Article 193. When a ship carrying cargo encounters wind and waves, the property loss caused by abandoning part of the cargo in order to prevent the ship from capsizing is considered general average.

A legal system in which all beneficiaries share proportionally. Only those losses that really belong to general average will be shared by the benefiting parties. Therefore, the establishment of general average should meet certain conditions, that is, maritime hazards must be common and real; general average measures must be intentional, reasonable, and Effective; the loss of general average must be special, abnormal, and directly caused by the common loss measures.
The elements of general average include:
① The ship is about to be in danger or has encountered a shipwreck during the voyage. The situation is urgent. The captain must take measures to maintain the safety of the cargo.
②The shipwreck and danger must be real and not speculated.
③The general average behavior must be artificial and deliberate.
④ Losses and expenses must be special. For example, if the ship is driven by strong wind, the machinery is damaged due to overload, which is not general average; and if the ship has run aground and the machinery is damaged due to the overload due to the overload, it is considered general average.
⑤The general average act taken must be reasonable.
⑥For the common, not the individual safety of the ship or a certain owner of the cargo.
⑦ is a loss directly caused by general average consequences. For example, sea water is used to extinguish fires. Any goods with burn marks that are immersed in sea water are not considered general average, and the loss of goods that were originally intact but damaged by sea water should be included in general average.
⑧ General average behavior should be directed by the captain in principle, but in unexpected circumstances, such as the captain is seriously ill, captured, and commanded by other people or even the captain of an enemy country, it is considered general average if the above seven conditions are met.

The establishment of general average must meet the following conditions

First
Ships, cargo and other property must encounter common dangers.

second
The measures taken must be intentional and reasonable.

third
The sacrifices made and the expenses paid must be special.

fourth
The measures taken must be effective, that is, the ship, cargo or other property must be out of danger.

General average losses include:

1. Loss of abandoned goods;

2. Losses in order to extinguish fires on board ships;

3. Cut off the loss of damaged parts;

4. Loss caused by voluntary stranding;

5. Loss of damage to machinery and boilers;

6. Used as marine materials and materials burned out;

7. Losses caused during unloading, etc.;

8. Loss of freight.

General average expenses include:

1. Bailout remuneration;

2. Cost of load shedding for stranded ships;

3. Expenses at the port of refuge, etc.;

4. Substitute cost

5. Advance fees and general average interest;

6. Adjust costs.

When general average occurs, in order to determine the apportionment ratio of general average, general average adjustment must be carried out, that is, the general average adjuster shall determine the items and amounts of general average loss and expenses in accordance with the adjustment rules, as well as the share of each beneficiary Value and apportionment, and finally the work of compiling the general average adjustment book.

What should I do if the insured goods are subject to general average?

First, confirm the accident with the inspection agency of the insurance company nearest to the accident, and then determine how to deal with it according to the situation of the accident. If it is a total loss, it is relatively simple. Provide the bill of lading, packing list, invoice, original insurance policy and the general average release letter of the captain You can settle the claim with the General Average Settlement Book,

If it is a partial average, it’s more complicated. In addition to providing the bill of lading, packing list, invoice, original insurance policy, and the captain’s general average release letter and general average adjustment statement, the insurance company also needs to verify the total amount of the ship’s cargo. The proportion of the total value of the goods insured by the insurance company, and then calculate the cost-sharing.

In short, after a general average occurs, the most important thing is to provide a general average guarantee letter, which is issued by an insurance company or a local inspection agency.

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