The term "extraordinary average" in maritime law refers to a principle where all parties involved in a commercial voyage share the financial burden of losses incurred by some of them for the collective benefit of all. This concept promotes fairness and cooperation among parties, ensuring that no single entity bears the entire loss when unexpected events occur during a voyage.
Extraordinary average is primarily used in maritime law, which governs shipping and navigation. It is relevant in situations where a loss occurs due to extraordinary circumstances, such as natural disasters or accidents. The principle is applied to ensure equitable distribution of losses among shipowners, cargo owners, and insurers. Users may encounter forms related to claims and agreements that reflect this principle, which can often be managed through legal templates provided by services like US Legal Forms.
Here are a couple of examples of abatement:
One example of extraordinary average could involve a cargo ship that encounters a severe storm, leading to the jettisoning of some cargo to save the vessel and the remaining goods. In this case, the owners of the jettisoned cargo would share the loss with the shipowner and the remaining cargo owners, as the action taken was for the safety of all.
(Hypothetical example) A shipping company decides to divert its route to avoid a hurricane, incurring additional costs. The costs may be shared among all parties involved, as the diversion was made to prevent greater losses.
Examples of state differences (not exhaustive):
| State | Variation |
|---|---|
| California | Strong emphasis on equitable sharing of losses among all parties. |
| Florida | Similar principles apply, but local statutes may influence specific procedures. |
| New York | Recognizes extraordinary average but may have different interpretations in case law. |
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
| Term | Definition | Difference |
|---|---|---|
| General Average | A principle where losses are shared among all parties due to voluntary sacrifices made for safety. | Extraordinary average specifically refers to losses from unforeseen events, while general average applies to voluntary actions. |
| Particular Average | A loss that is borne by a specific party, not shared among others. | Extraordinary average involves shared losses, while particular average does not. |
If you find yourself involved in a situation where extraordinary average applies, consider the following steps:
Browse our library of 85,000+ state-specific legal templates.