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AVERAGES: An item of expense or damage o Expense: you have to spend money for something Disbursed btwn time of departure

re till arrival) o Damage: ex) jettison Ex) Jettison: when you throw cargo overboard o This is an average bec its a damage wc is suffered by merchandise btwn the pt when its loaded til its unloaded (from time of departure till arrival) Is there a similarity btwn average here & GWA? Averages: either gross or general OR simple or particular o When the law separates or distinguishes/1st defines & then enumerates gen & particular averages what 1 item/fact strikes us as that wc separates 1 ave from the other? o Why is the distinction impt? Distinction is impt bec of the right of contribution = right of reimbursement Right of contribution: more accurate term RIGHT OF CONTRIBUTION: o Contribution is made of in favor for the person who incurred the damage/expense o Right to contribute, to make whole the person who has suffered from the average o This DSNT EXIST in all averages Only exists in the case of gen ave Can compel other parties to the venture to contribute In particular ave: theres no right to contribution, so the person who incurred the damage/expense suffers his own loss = ea to his own loss No right to contribution What you need to know: 1st: det what the ave is expense or damage incurred by the vessel or cargo during the voyage btwn loading & unloading o Shld be incurred during the voyage o Incurred by the owner of cargo or owner of the vessel o When expense/damages takes place, there are persons who arent happy bec they dont want expenses, just want profits o Ex) vessel is delayed bec of an arrival under stress expense! Bec needs to feed the crew, etc 2nd: det if its gen or particular ave: o There is NO TOTAL RECOVERY, regardless of whether it gen or particular ave Bec a percentage of the expense/damage will be charged also to the person who suffered the same Its a contribution to himself (bec every1 contributes) o More impt ave: the gen/gross ave Bec of the right of contribution So businessmen are more concerned w determining if its gen/gross ave o How will you det if its gen or particular? (look at the reqs) Gen/Gross ave: Reqs:

The expense/damage was deliberately incurred To save the vessel or cargo o For common safety common to the owner of the vessel & the owner of the goods Rem: Their interests are conflicting o Success: successful saving of the vessel & cargo If jettison the car, but vessel is lost anyway = X gen ave, its a shipwreck o Real & known risk: provides a common threat/dangers to the vessel & cargo Law also enumerates other instances of gen ave (A811) Anything outside the defn & enumeration is a simple/particular ave if its an ave in the 1st place Defn here similar to the defn of PU: its a defn by example o It provides you w a gen defn & then provides examples of what it might includes o So its an enumeration wc isnt exclusive/exhaustive In det WON the ave is gen or particular: o Falls w/in the enumeration of gen ave = gen ave! Everything outside of this is particular Ex) if it was a CC, no need to look at the gen defn of a PU = no need to look at the Q of WON its a PU bec for sure youre a PU bec youre under the enumeration o If not w/in the enumeration of the particular ave = can still be a particular ave IF NOT a gen ave o

Magsaysay v Agan: SS Antonio ran aground & it was refloated o Ran aground bec there was a sudden shifiting of the sandbar wc the Capt ddnt anticipate, so he made a mistake & it ran aground Ave here: cost of the refloating o Particular ave bec it ddnt comply w the reqs of a gen ave There was NO DANGER o Water was very shallow, fine weather Wsnt dne for the common safety of the vessel or cargo Successful refloating but sacrifice was only for the vessels benefit so it cld proceed to its destination & not for the purpose of saving the cargo Cant fall under #6, A811: bec the stranding wsnt intentional o REASON why not a gen ave: The expense wsnt deliberately incurred o No conscious undertaking of the expense or damage Ex) ship is abt to sink capt & crew det that the best way to save is to throw some cargo overboard; so throws a car overboard The expenses from refloating ddnt arise from a deliberate act o The Capt ddnt intentionally run aground the vessel to save it

A. 1.

Averages Concept


Article 806 of the Code of Commerce provides that: For the purposes of this code the following shall be considered averages: 1. All extraordinary or accidental expenses which may be incurred during the voyage in order to preserve the vessel, the cargo, or both; 2. Any damages or deteriorations which the vessel may suffer from the time it puts to sea from the port of departure until it casts anchor in the port of destination, and those suffered by the merchandise from the time they are loaded in the port of shipment until they are unloaded in the port of their consignment. Classes of average and the persons liable a. Simple average Article 809 of the Code of Commerce provides that: As a general rule, simple or particular averages shall include all the expenses and damages caused to the vessel or to her cargo which have not inured to the common benefit and profit of all the persons interested in the vessel and her cargo, and especially the following: 1. The losses suffered by the cargo from the time of its embarkation until it is unloaded, either on account of inherent defect of the goods or by reason of an accident of the sea or force majeure, and the expenses incurred to avoid and repair the same; 2. The losses and expenses suffered by the vessel in its hull, rigging, arms, and equipment, for the same causes and reasons, from the time it puts to sea from the port of departure until it anchors and lands in the port of destination; 3. The losses suffered by the merchandise loaded on deck, except in coastwise navigation, if the marine ordinances allow it; 4. The wages and victuals of the crew when the vessel is detained or embargoed by legitimate order or force majeure, if the charter has been contracted for a fixed sum for the voyage; 5. The necessary expenses on arrival at a port, in order to make repairs or secure provisions; 6. The lowest value of the goods sold by the captain in arrivals under stress for the payment of provisions and in order to save the crew, or to meet any other need of the vessel, against which the proper amount shall be charged; 7. The victuals and wages of the crew while the vessel is in quarantine;



The loss inflicted upon the vessel or cargo by reason of an impact or collision with another, if it is accidental and unavoidable. If the accident should occur through the fault or negligence of the captain, the latter shall be liable for all the losses caused; 9. Any loss suffered by the cargo through the fault, negligence, or barratry of the captain or of the crew, without prejudice to the right of the owner to recover the corresponding indemnity from the captain, the vessel, and the freightage. General Rule: No reimbursement Principle: Loss will lie where it falls Reason: There was no common benefit Exception: if there is insurance Exception to the Exception: Stipulated in the insurance policy stating no liability on the part of the insurer regarding particular average. Article 810 of the Code of Commerce provides that: The owner of the goods which gave rise to the expense or suffered the damage shall bear the simple or particular averages. Q: Who is liable? A: Owner of the goods General average Article 811 of the Code of Commerce provides that: As a general rule, general or gross averages shall include all the damages and expenses which are deliberately caused in order to save the vessel, its cargo, or both at the same time, from a real and known risk, and particularly the following: 1. The goods or cash invested in the redemption of the vessel or of the cargo captured by enemies, privateers, or pirates, and the provisions, wages, and expenses of the vessel detained during the time the settlement or redemption is being made; 2. The goods jettisoned to lighten the vessel, whether they belong to the cargo, to the vessel, or to the crew, and the damage suffered through said act by the goods which are kept on board; 3. The cables and masts which are cut or rendered useless, the anchors and the chains which are abandoned, in order to save the cargo, the vessel, or both; 4. The expenses of removing or transferring a portion of the cargo in

order to lighten the vessel and place it in condition to enter a port or roadstead, and the damage resulting therefrom to the goods removed or transferred; 5. The damage suffered by the goods of the cargo by the opening made in the vessel in order to drain it and prevent its sinking; 6. The expenses caused in order to float a vessel intentionally stranded for the purpose of saving it; 7. The damage caused to the vessel which had to be opened, scuttled or broken in order to save the cargo; 8. The expenses for the treatment and subsistence of the members of the crew who may have been wounded or crippled in defending or saving the vessel; 9. The wages of any member of the crew held as hostage by enemies, privateers, or pirates, and the necessary expenses which he may incur in his imprisonment, until he is returned to the vessel or to his domicile, should he prefer it; 10. The wages and victuals of the crew of a vessel chartered by the month, during the time that it is embargoed or detained by force majeure or by order of the government, or in order to repair the damage caused for the common benefit; 11. The depreciation resulting in the value of the goods sold at arrival under stress in order to repair the vessel by reason of gross average; 12. The expenses of the liquidation of the average. Article 812 of the Code of Commerce provides that: In order to satisfy the amount of the gross or general averages, all the persons having an interest in the vessel and cargo therein at the time of the occurrence of the average shall contribute. Article 813 of the Code of Commerce provides that: In order to incur the expenses and cause the damages corresponding to gross average, there must be a resolution of the captain, adopted after deliberation with the sailing mate and other officers of the vessel, and after hearing the persons interested in the cargo who may be present. If the latter shall object, and the captain and officers or a majority of them, or the captain, if opposed to the majority, should consider

certain measures necessary, they may be executed under his responsibility, without prejudice to the right of the shippers to proceed against the captain before the competent judge or court, if they can prove that he acted with malice, lack of skill, or negligence. If the persons interested in the cargo, being on board the vessel, have not been heard, they shall not contribute to the gross average, their share being chargeable against the captain, unless the urgency of the case should be such that the time necessary for previous deliberations was wanting. Article 816 of the Code of Commerce states that: In order that the goods jettisoned may be included in the gross average and the owners thereof be entitled to indemnity, it shall be necessary insofar as the cargo is concerned that their existence on board be proven by means of the bill of lading; and with regard to those belonging to the vessel, by means of the inventory prepared before the departure in accordance with the first paragraph of Article 812. Article 817 of the Code of Commerce states that: if in lightning a vessel on account of a storm, in order to facilitate its entry into a port or roadstead, part of the cargo should be transferred to lighters or barges and be lost, the owner of said part shall be entitled to indemnity, as if the loss had originated from a gross average, the amount thereof being distributed between the vessel and cargo from which it came. If, on the contrary, the merchandise transferred should be saved and the vessel should be lost, no liability may be demanded of the salvage. Article 818 of the Code of Commerce states that: If, as a necessary measure to extinguish a fire in port, roadstead, creek, or bay, it should be decided to sink any vessel, this loss shall be considered gross average, to which the vessels saved shall contribute. Article 732 of the Code of Commerce provides that: Lenders on bottomry or respondentia shall suffer, in proportion to their respective interest, the general average which may take place in the goods on which the loan is made. In particular averages, in the absence of an express agreement between the contracting parties, the lender on bottomry or respondentia shall also contribute in proportion to his respective interest,

should it not belong to the kind of risks excepted in the foregoing article. Article 859 of the Code of Commerce provides that: The insurers of the vessel of the freightage, and of the cargo shall be obliged to pay for the indemnification of the gross average, insofar as is required of each one of these objects respectively. Article 860 of the Code of Commerce provides that: If, notwithstanding the jettison of merchandise, breakage of masts, ropes, and equipment, the vessel should be lost running the same risk, no contribution whatsoever by reason of gross average shall be proper. The owners of the goods saved shall not be liable for the indemnification of those jettisoned, lost, or damaged. Article 861 of the Code of Commerce provides that: If, after the vessel has been saved from the risk which gave rise to the jettison, it should be lost through another accident taking place during the voyage, the goods saved and existing from the first risk shall continue liable to contribution by reason of the gross average according to their value in the condition in which they may be found, deducting the expenses incurred in saving them. Remedy: Reimbursement General Rule: The sacrifice made must be in the course of the voyage. Exceptions: General average exists even if there is no voyage yet: 1. Article 817 of the Code of Commerce which covers fire in the port; and 2. Article 818 of the Code of Commerce which covers transfer of cargo to another vessel for the necessity to enter another port. Requisites: 1. Exposure to common danger to ship and the cargo after it has been loaded whether during voyage or port of loading and unloading; 2. That for the common safety part of the vessel or the cargo or both is sacrificed deliberately; 3. That from the expenses or damages caused follows the successful saving of the vessel and cargo; 4. That the expenses or damages should have been incurred or inflicted after taking legal steps and authority Formalities: 1. There must be a resolution of the captain, adopted after a deliberation with the other officers of the vessel and after hearing all persons interested in the cargoes. If the latter


disagree, the decision of the captain should prevail but they shall register their objections. The resolution must be entered in the logbook, stating the reasons and motives for the dissent, and the irresistible and urgent causes if he acted in his own accord. It must be signed, in the first case, by all persons present in the hearing. In the second case, by the captain and all the officers of the vessel. The minutes must also contain a detail of all the goods jettisoned and those injuries caused to those on board.

3. Liquidation of Average 4. Whether general or particular average, the person benefited by the damage or expense incurred must contribute his proportionate share, to be determined by the amount of damages or expenses incurred and apportioned among the those benefited in proportion to the value of their property save. 5. In particular average, it is implied that there is only one interest involved and the proportion pertains to him 100%.