The principle generally acted upon for the indemnification of damages and losses sustained in a case of general average, is that the owner of the thing, being damaged or sacrificed f0r the sake of common safety, is to receive the amount he would have got from his property should it have reached its destination in a sound state.

Thus the price of goods composing the cargo should be taken at such an amount as they would have fetched if sold on that market at the time of their arrival, subject to deduction of freight, customs duties, brokerage, and other usual charges. Such a valua­tion is to be stated, in regulur pro forma accounts sales, by merchants or brokers duly appointed.

“Goods jettisoned are valued by ascertaining the market price of some part which has arrived, and cal­culating the full amount on the weights and numbers noted on the original invoice or bill of lading.

As to goods damaged, the difference between their actual value and their calculated market price in a sound state, constitutes the so-called salvage loss to be reimbursed, which takes place when goods are badly damaged, and comes under particular average.

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The amount of freight is recoverable both on goods arrived and destroyed.

As to the damages suffered by the ship, the cost of repairs, and that of the new appurtenances taking place of what has been lost, are usually charged for two-thirds only in the statement of general average.

The deduction of one-third on the claim, known in the trade as the new for old reduction, is made in con­sideration of the deterioration the ship had already suffered by previous use, and of her consequent reduced value.

However, as no provision of the law requires such a deduction, ship-owners often succeed in having the full amount of the ship’s damage charged in the statement of a general average.

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Contribution to General Average.-

It has been already stated that each of the co-adventurers is to take part in a proportional share in the common loss no matter whether he has himself been a loser; as they all must be on an equal standing, each one con­tributing towards covering the deficiency of the others, as well as his own.

In order to fix the rate of contribution due by the ship, cargo and freight, in a general average, their respective value is to be calculated according to their actual state and condition in the place where, and at the time when, the adjustment of average take; place.

Thus, the ship will contribute in proportion to her value on arrival at port of destination, less deduction for the amount of such repairs as she may have un­dergone after the damage previous to her reaching such a port.

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The jettisoned part of the cargo, if any, contributes for its full sound value computed at port of destina­tion, and the damaged part for its actual value in her damaged condition.

If the goods are actually sold at port of destination the net proceeds of the sale is, of course, the exact figure of their value, in proportion to which the owner is to contribute.

The contribution of freight is calculated on the amount due to the ship at the moment when she breaks company with the cargo.

Practical Example of Adjustment.-

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Lord Tenterden, in his work on the law of shipping, gives the following example of an adjustment of general aver­age, which we quote as an example of the mode in which the operation may be carried out:

“The reader will suppose that it became necessary in the Downs to cut the cable of a ship destined for Hull; that the ship afterwards struck on the Good-­wins, which compelled the master to cut away her mast, and cast overboard part of the cargo, in which operation another part was injured; and that the ship, being cleared from the sands, was forced to take refuge in Ramsgate harbour to avoid the further effects of the storm.”

In explanation of the above statement we subjoin the following remarks:

The losses, damages and outlays altogether sus­tained, in this instance, by the cargo, the ship, and the freight, amount to one-tenth part of the total of the contributory values; it is clear, therefore, that each party will have to contribute towards the common loss for one-tenth of the value of his property.

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On the other hand, some of them have to receive, out of the total of contributions, the amount of damages, losses or outlays respectively sustained, viz.-

Deducting from these figures the sums they are respectively bound to contribute, it results that-

And thus altogether 750; a sum equal to the amount of contribution to be paid by C., D. E., who have suffered no damage.

(In this example of Lord Tenterden, the ship-owner receives only two-thirds of the value of his anchor and chain cast away, which is contrary to present practice.)

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Average Bond and Agreement.-

Two different de­scriptions of documents connected with the adjust­ment of general average are indiscriminately called either average bonds or average agreements.

One is a deed whereby the parties interested in a general average appoint one or more persons to fix the contribution of each party to the loss or damage suffered, investing such person or persons with the power of an arbitrator. The statement given has in this case the force of an award, while the statement of an average adjuster, appointed in a different way, may always be questioned by the parties, and must, therefore, be enforced by legal process.

As to the other, it may be defined as a waiver, on the ship owner’s part, of that lien which he has on the cargo for the payment of its contribution to a general average; such a lien being waived in consideration of a different security.

It is, in fact, a written agreement whereby the captain of a ship, which has suffered general average, promises, in his owner’s behalf, to deliver to the holders of bills of lading for goods shipped in his vessel, their respective consignments, on payment of freight, and against their promise (frequently covered by a deposit) to pay the respective proportion of general average or other charges which may be law­fully chargeable on their consignments.

The scope of the agreement is to enable the con­signee or consignees of a cargo to dispose of their goods, pending the adjustment of general average, which, of course, cannot be done without some delay.

Provisional Means of Meeting Average.-

In order to raise the money required to meet charges for ship’s repair, supplies, etc., arising from damages suffered at sea, and thus enable the ship to proceed on her voyage, a captain may have recourse to three different means, according to the case. These are:-

(a) Borrowing the amount on the credit of the ship’s owner;

(b) Pledging the ship, or the ship, freight and cargo, as a security for a loan;

(c) Selling part of the cargo.

The first is the simplest, end is always resorted to at a home port, or wherever the captain finds it prac­ticable, as it saves considerable time and heavy out­lays both to ship and cargo.

The second is also very common in the shipping trade, and consists of an operation regulated by law and practice, called a bottomry bond.