1911 Encyclopædia Britannica/Average
AVERAGE, a term found in two main senses. (1) The first, which occurs in old law, is from a Law-Latin averagium, and is connected with the Domesday Book avera, the “day's work which the king's tenants gave to the sheriff”; it is supposed to be a form of the O. Fr. ovre (œuvre), work, affected by aver, the O. Eng. word for cattle or property, but the etymology is uncertain. As meaning some form of feudal service rendered by tenants to their superiors, it survived for a long time in the Scottish phrase “arriage and carriage,” this form of the word being due to a contraction into “arage.” (2) The second word, which represents the modern usages, is also uncertain in its derivation, but corresponded with the Fr. avarie, and was early spelt “averays,” recurring also as “avaria,” “averia,” and meaning a certain tax on goods, and then more precisely in maritime law any charge additional to “freight” (see Affreightment), payable by the owner of goods sent by ship. Hence the modern employment of the term for particular and general average (see below) in marine insurance. The essential of equitable distribution, involved in this sense, was transferred to give the word “average” its more colloquial meaning of an equalization of amount, or medium among various quantities, or nearest common rate or figure. (For a discussion of the etymology, see the New English Dictionary, especially the concluding note with reference to authorities.)
In Shipping.—Average, in modern law, is the term used in maritime commerce to signify damages or expenses resulting from the accidents of navigation. Average is either general or particular. General average arises when sacrifices have been made, or expenditures incurred, for the preservation of the ship, cargo and freight, from some peril of the sea or from its effects. It implies a subsequent contribution, from all the parties concerned, rateably to the values of their respective interests, to make good the loss thus occasioned. Particular average signifies the damage or partial loss happening to the ship, goods, or freight by some fortuitous or unavoidable accident. It is borne by the parties to whose property the misfortune happens or by their insurers. The term average originally meant what is now distinguished as general average; and the expression “particular average,” although not strictly accurate, came to be afterwards used for the convenience of distinguishing those damages or partial losses for which no general contribution could be claimed.
Although nothing can be more simple than the fundamental principle of general average, that a loss incurred for the advantage of all the coadventurers should be made good by them all in equitable proportion to their stakes in the adventure, the application of this principle to the varied and complicated cases which occur in the course of maritime commerce has given rise to many diversities of usage at different periods and in different countries. It is soon discovered that the principle cannot be applied in any settled or consistent manner unless by the aid of rules of a technical and sometimes of a seemingly arbitrary character. The difficulty, which at one time seemed nearly insuperable, of bringing together the rules in force in the several maritime countries, has been to a large extent overcome—not by legislation but by framing a set of rules covering the principal points of difference in such a manner as to satisfy, on the whole, those who are practically concerned, and to lead them to adopt these History of the York-Antwerp rules. rules in their contracts of affreightment and contracts of insurance (see Insurance: Marine). The honour of the achievement belongs to a small number of men who recognized the need of uniformity. The work began in May 1860 at the congress held at Glasgow, under the presidency of Lord Brougham, assisted by Lord Neaves. Further congresses were held in London (1862), and at York (1864), when a body of rules known as the “York Rules” was agreed to. There the matter stood, until it was taken up by the “Association for the Reform and Codification of the Law of Nations” at conferences held at the Hague (1875), Bremen (1876) and Antwerp (1877). Some changes were made in the “York Rules”; and so altered, the body of rules was adopted at the last-named conference, and was styled the “York and Antwerp (or York-Antwerp) Rules.” The value of these rules was quickly perceived, and practical use of them followed. But they proved to be insufficient, or unsatisfactory, on some points; and again, in the autumn of 1890, a conference on the subject was held, this time at Liverpool, by the same Association, under the able presidency of Dr F. Sieveking, president of the Hanseatic High Court of Appeal at Hamburg. Important changes were then made, carrying further certain departures from English law, already apparent in the earlier rules, in favour of views prevailing upon the continent of Europe and in the United States. The new rules were styled the YorkAntwerp Rules 1890. In practice they quickly displaced those of 1877; and in 1892, at a conference of the same Association held at Genoa, it was formally declared that the only international rules of general average having the sanction and authority of the association were the York-Antwerp Rules as revised in 1890, and that the original rules were rescinded. It is this later body of rules which is now known as the York-Antwerp Rules. Reference is now to be found in most English contracts of carriage and contracts of insurance, to these rules, as intended to govern the adjustment of G.A. between the parties; with the result that (so far as the rules cover the ground) adjustments do not depend upon the law of the place of destination, and so do not vary according to the destination, or the place at which the voyage may happen to be broken up, as used formerly to be the case.
The rules are as follows:—
Rule I.—Jettison of Deck Cargo
Rule II.—Damage by Jettison and Sacrifice for the Common Safety
Rule III.—Extinguishing Fire on Shipboard
Rule IV.—Cutting away Wreck
Rule V.—Voluntary Stranding
Rule VI.—Carrying Press of Sail—Damage to or Loss of Sails
Rule VII.—Damage to Engines in Refloating a Ship
Rule VIII.—Expenses of Lightening a Ship when Ashore, and Consequent Damage
Rule IX.—Cargo, Ship's Materials, and Stores Burnt for Fuel
Rule X.—Expenses at Port of Refuge, &c.
Rule XI.—Wages and Maintenance of Crew in Port of Refuge, &c.
Rule XII.—Damage to Cargo in Discharging, &c.
Rule XIII.—Deductions from Cost of Repairs
- All repairs to be allowed in full, except painting or coating of bottom, from which one-third is to be deducted.
- One-third to be deducted off repairs to and renewal of woodwork of hull, masts and spars, furniture, upholstery, crockery, metal and glassware, also sails, rigging, ropes, sheets and hawsers (other than wire and chain), awnings, covers and painting.
- One-sixth to be deducted off wire rigging, wire ropes and wire hawsers, chain cables and chains, donkey engines, steam winches and connexions, steam cranes and connexions; other repairs in full.
- Deductions as above under clause B, except that one-sixth be deducted off ironwork of masts and spars, and machinery (inclusive of boilers and their mountings).
- Deductions as above under clause C, except that one-third be deducted off ironwork of masts and spars, repairs to and renewal of all machinery (inclusive of boilers and their mountings), and all hawsers, ropes, sheets and rigging.
- One-third to be deducted off all repairs and renewals, except ironwork of hull and cementing and chain cables, from which one-sixth to be deducted. Anchors to be allowed in full.
- One-third to be deducted off all repairs and renewals. Anchors to be allowed in full. One-sixth to be deducted off chain cables.
- The deductions (except as to provisions and stores, machinery and boilers) to be regulated by the age of the ship, and not the age of the particular part of her to which they apply. No painting bottom to be allowed if the bottom has not been painted within six months previous to the date of accident. No deduction to be made in respect of old material which is repaired without being replaced by new, and provisions and stores which have not been in use.In the case of wooden or composite ships:—
- When a ship is under one year old from date of original register, at the time of accident, no deduction “new for old” shall be made. After that period a deduction of one-third shall be made, with the following exceptions:—
- Anchors shall be allowed in full. Chain cables shall be subject to a deduction of one-sixth only.
- No deduction shall be made in respect of provisions and stores which had not been in use.
- Metal sheathing shall be dealt with, by allowing in full the cost of a weight equal to the gross weight of metal sheathing stripped off, minus the proceeds of the old metal. Nails, felt and labour metalling are subject to a deduction of one-third.
- In the case of all ships, the expense of straightening bent ironwork, including labour of taking out and replacing it, shall be allowed in full.
- Graving dock dues, including expenses of removals, cartages, use of shears, stages and graving dock materials, shall be allowed in full.
Rule XIV.—Temporary Repairs
Rule XV.—Loss of Freight
Rule XVI.—Amount to be made good for Cargo Lost or Damaged by Sacrifice
Rule XVII.—Contributory Values
The above rules differ in some important respects from English common law, and from former English practice. They follow ideas upon the subject of G.A. which have prevailed in practice in foreign countries (though often in apparent opposition to the language of the codes), in preference to the more strict principle of the common law applied by English courts. That principle requires that, in order to have the character of G.A. a sacrifice or expenditure must be made for the common safety of the several interests in the adventure and under the pressure of a common risk. It is not enough that the sacrifice or expenditure is prudent, or even necessary to enable the common adventure to be completed. G.A., on the English view, only arises where the safety of the several interests is at stake. “The idea of a common commercial adventure, as distinguished from the common safety from the sea,” is not recognized. It is not sufficient “that an expenditure should have been made to benefit both cargo owner and shipowner.”
It may be of interest to refer briefly to one or two main principles which govern the adjustment (q.v.) of general average, i.e. the calculation of the amounts to be made good and paid by the several interests, which is a complicated matter. The fundamental idea is that the several interests at risk shall contribute in proportion to the benefits they have severally received by the completion of the adventure. Contributions are not made in proportion to the amounts at stake when the sacrifice was made, but in proportion to the results when the adventure has come to an end. An interest which has become lost after the sacrifice, during the subsequent course of the voyage, will pay nothing; an interest which has become depreciated will pay in proportion to the diminished value. The liability to contribute is inchoate only when the sacrifice has been made. It becomes complete when the adventure has come to an end, either by arrival at the destination, or by having been broken up at some intermediate point, while the interest in question still survives. To this there is one exception, in the case of G.A. expenditure. Where such expenditure has been incurred by the owner of one interest, generally by the shipowner, the repayment to him by the other interests ought not to be wholly dependent upon the subsequent safety of those interests at the ultimate destination. If those other interests or some of them arrive, or are realized, as by being landed at an intermediate port, the rule (as in the case of G.A. sacrifices) is that the contributions are to be in proportion to the arrived or realized values. But if all are lost the burden of the expenditure ought not to remain upon the interest which at first bore it; and the proper rule seems to be that contributions must be made by all the interests which were at stake when it was made, in proportion to their then values.
Again, the object of the law of G.A. is to put one whose property is sacrificed upon an equal footing with the rest, not upon a better footing. Thus, if goods to the value of £100 have been thrown overboard for the general safety, the owner of those goods must not receive the full £100 in contribution. He himself must bear a part of it, for those goods formed part of the adventure for whose safety the jettison was made; and it is owing to the partial safety of the adventure that any contribution at all is received by him. He, therefore, is made to contribute with the other saved interests towards his own loss, in respect of the amount “made good” to him for that. The full £100 is treated as the amount to be made good, but the owner of the goods is made to contribute towards that upon the sum of £100 thus saved to him.
The same principle has a further consequence. The amount to be made good will not necessarily be the value of the goods or other property in their condition at the time they were sacrificed; so to calculate it would in effect be to withdraw those goods from the subsequent risks of the voyage, and thus to put them in a better position than those which were not sacrificed. Hence, in estimating the amount to be made good, the value of the goods or property sacrificed must be estimated as on arrival, with reference to the condition in which they would probably have arrived had they remained on board throughout the voyage.
The liability to pay G.A. contributions falls primarily upon the owner of the contributing interest, ship, goods or freight. But in practice the contributions are paid by the insurers of the several interests. Merchants seldom have to concern themselves with the subject. And yet in an ordinary policy of insurance there is no express provision requiring the underwriter to indemnify the assured against this liability. The policy commonly contains clauses which recognize such an obligation, e.g. a warranty against average “unless general,” or an agreement that G.A. shall be payable “as per foreign statement,” or “according to York-Antwerp Rules”; but it does not directly state the obligation. It assumes that. The explanation seems to be that the practice of the underwriter to pay the contribution has been so uniform, and his liability has been so fully recognized, that express provisions were needless. But one result has been that very differing views of the ground of the obligation have been held. One view has been that it is covered by the sue and labour clause of an ordinary policy, by which the insurer agrees to bear his proportion of expenses voluntarily incurred “in and about the defence, safeguard and recovery” of the insured subject. But that has been held to be mistaken by the House of Lords (Aitchison v. Lohre, 1879, 4 A.C. 755). Another view is that the underwriter impliedly undertakes to repay sums which the law may require the assured to pay towards averting losses which would, by the contract, fall upon the underwriter. Expenses voluntarily incurred by the assured with that object are expressly made repayable by the sue and labour clause of the policy. It might well be implied that payments compulsorily required from the assured by law for contributions to G.A., or as salvage for services by salvors, will be undertaken or repaid by the underwriter, the service being for his benefit. But the decision in Aitchison v. Lohre negatives this ground also. The claim was against underwriters on a ship which had been so damaged that the cost of repairs had exceeded her insured value. A claim for the ship's contribution to certain salvage and G.A. expenses which had been incurred, over and above the cost of repairs, was disallowed. The view seems to have been that the insurer is liable for salvage and G.A. payments as losses of the subject insured, and therefore included in the sum insured, not as collateral payments made on his behalf. This bases the claim against the insurer upon a fiction, for there has been no loss of the subject insured; in fact, the payment has been for averting such a loss. And it suggests that the insurer is not liable for salvage where the policy is free of particular average, which does not accord with practice.
An important question as to an insurer’s liability for G.A. arose in the case of the Brigella (1893, P. 189), where a shipowner had incurred expenses which would have been the subject of G.A. contributions, but that he alone was interested in the voyage. There were no contributories. He claimed from the insurers of the ship what would have been the ship’s G.A. contribution had there been other persons to contribute in respect of freight or cargo. The claim was disallowed on the ground that there could be no G.A. in such circumstances, and therefore no basis for a claim against the insurer. The liability of the insurer was thus made to depend, not upon the character of the loss, but upon the fact or possibility of contribution. But this was not followed in Montgomery v. Indemnity Mutual M. I. Co. (1901, 1 K.B. 147). There ship, freight and cargo all belonged to the same person. He had insured the cargo but not the ship. The cargo underwriters were held liable to pay a contribution to damage done to the ship by cutting away masts for the general safety. The loss was in theory spread over all the interests at risk, and they had undertaken to bear the cargo’s share of such losses. Their liability did not depend upon the accident of whether the interests all belonged to one person or not. This agrees with the view taken in the United States.
As to Particular Average, see under Insurance: Marine.Authorities.—Lowndes on General Average (4th ed., London, 1888); Abbott’s Merchant Ships and Seamen (14th ed., London, 1901); Arnould’s Marine Insurance (7th ed., London, 1901); Carver’s Carriage by Sea (4th ed., London, 1905). (T. G. C.)
- Per Bowen, L.J., in Svensden v. Wallace, 1883, 13 Q.B.D. at p. 84.