General Average Contribution

General Average Contribution

The amount of money paid by each shipper involved in a General Average.

General Average Contribution

The amount a company pays the shipping company or the losing company in a general average. A general average is a form of insurance in maritime law stating that if one company's cargo must be thrown overboard in order to save the ship from sinking, all other companies with cargo on the ship must pay restitution. Normally, each company's general average contribution is in proportion to the amount of cargo each had on the ship. This is done to reduce risk to all companies using a ship to transport their goods.
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General average contribution is defined to be a contribution by all parties in a sea adventure to make good the loss sustained by one of their number due to voluntary sacrifices of part of the ship or cargo to save the remainder and the lives of those on board from an impending peril, or for extraordinary expenses necessarily incurred by one or more of the parties for the general benefit of all the interests embarked in the enterprise.
Acts of piracy have long been viewed as general average acts, and ransom paid as a result would be covered as a general average contribution (Barnard 1850).
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