An Inter-Ocean Transfer cargo ship was forced to jettison some cargo in heavy seas.The various interests in the voyage at the time the property was jettisoned were
Value of the ship $2.0 million
Value of lumber and wood chips 1.0 million
Value of iron ore $2.0 million
If $400,000 worth of iron ore was jettisoned,for how much of this amount would Inter-Ocean Transfer be responsible under general average?

Question

Quizplus · Accepted Answer

In a general average situation, all parties involved in the maritime venture share the loss proportionately to their interest in the venture. The total value of the interests before the jettison was $5 million ($2 million for the ship, $1 million for lumber and wood chips, and $2 million for iron ore). Since $400,000 worth of iron ore was jettisoned, the contribution of each interest to the loss is calculated based on their proportion of the total value. The ship's value ($2 million) represents 40% of the total value, the lumber and wood chips ($1 million) represent 20%, and the iron ore ($2 million) represents 40%. Therefore, each interest contributes to the loss according to these percentages. Since $400,000 worth of iron ore was jettisoned, Inter-Ocean Transfer would be responsible for 40% of this amount, which is $160,000.

An Inter-Ocean Transfer Cargo Ship Was Forced to Jettison Some