Posted in Operations and Supply Chain Terms, Total Reads: 229
Definition: General Average
General average is a legal norm of maritime law in which the parties entering into a sea venture share losses proportionally if any voluntary sacrifice of a part of the ship or cargo is made to save the ship in case of an emergency.
In the emergencies of dangers faced at sea, crew members have little time to determine surely whose cargo they are abandoning ( the word used in this case is called jettisoning). In order to avoid arguing that could waste precious time, there came the norm or a practice of equitable distribution of losses according to which all the merchants, would contribute a portion based upon a share or percentage, whose cargo landed safely, to the merchant or merchants whose goods had been jettisoned.
Though general average was an ancient maritime law, it still remains part of the naval law of most countries.
General average is useful as it avoids conflict and provides a compensation to the merchant whose goods are tossed into the sea to save the ship and the rest of the cargo.