Particular Average, General Average, Salvage, and Sue and Labour
Scope
This domain tests four related but distinct concepts: particular average, general average, salvage and sue-and-labour. The exam expects correct classification and correct treatment of each in a cargo claim.
Definitions and rules
- Particular average is a partial loss caused by an insured peril and borne by the owner of the damaged cargo alone.
- General average is an intentional and extraordinary sacrifice or expenditure made for the common safety of ship, cargo and freight in a common maritime adventure. It is adjusted under the York-Antwerp Rules, usually 2016, and contributions are apportioned among the saved property.
- Salvage is a reward for saving maritime property from danger. It may be fixed by agreement, arbitration or court, and may be allowed as general average or as a salvage charge.
- Sue-and-labour or minimising-loss expenses are reasonably incurred by the insured to avert or minimise a loss covered by the policy. They are recoverable under the clause, in addition to the insured loss, and the insured must not abandon the cargo without justification.
Worked example
A vessel grounds. To refloat her, the master jettisons part of the cargo and hires tugs. The jettison is a general average sacrifice; the tug hire is a general average expenditure. The cargo owner's insurer pays the cargo's general average contribution and, for the jettisoned cargo, the allowed GA loss. If the insured separately hires pumps to dry undamaged cargo threatened by water, that may be a sue-and-labour expense.
Traps
Do not call every partial loss general average. GA requires a deliberate sacrifice for common safety, not accidental damage. Do not confuse salvage with towage. Do not pay sue-and-labour costs as ordinary particular average without checking the clause.