Average. If any number of unequal quantities are given, another quantity may be found of a mean or intermediate magnitude, some of the given quantities being greater, and others less, than the one found, which is called the average. The exact relation is this: that the sum of the excesses of the greater above the average is equal to the sum of the defects of the less below it. If there are seven vessels unequally filled with sand, and containing, say, 5, 10, 12, 8, 11, 14, 3 ounces, the average is found by adding the numbers together, and dividing the sum 63 by 7, which gives 9 ounces as the average. Reflection, however, requires to be exercised in striking averages. If a farmer has three lots of cattle, the first of which he averages at £25 a head, the second at £15, and the third at £9, it might be thought that the average of the whole stock made up of the three lots would be got by taking the mean of £25, £15, and £9—viz. . But this would be correct only if there were an equal number of cattle in each of the lots. To get the real average in case of the lots being unequal, he must multiply the average of each lot by the number of cattle in it, add the three products together, and divide by the whole number of cattle in all three lots taken together. If we suppose 9 head in the first lot, 20 in the second, and 15 in the third, the average is .
General Average is a contribution made by the various interests associated in a maritime adventure to restore the value of any sacrifice or extraordinary expense voluntarily incurred for the general safety. This equitable rule is to be found in the Rhodian law (q.v.) and in the Rolls of Oleron (q.v.), and has been adopted with certain modifications and differences by all maritime nations. The requisites to this contribution are that the sacrifice of part of the cargo, ship, or rigging has been advisedly made to procure the safety of what remains. The loss must not be caused by fault of the master or improper stowage; thus the throwing overboard or Jettison (q.v.) of deck cargo will not give rise to average unless the stowing on deck is customary or agreed to by the contributing parties. The value of the cargo thrown overboard is computed at the market price at the port of delivery, less freight and charges saved. Among other losses covered by general average are those arising from the discharge of cargo to lighten the ship, from damage to ship or cargo in order to extinguish fire, or from cutting away masts or slipping anchors and cables to save the ship. The expenses incurred in floating a stranded ship or entering a port of refuge are also included, but no loss or expense falling under the shipowner's contract to keep his ship fit for service will be so included.
The contributing parties are the owners of the ship, the cargo, and the freight, or in modern times the insurers of these, and they are assessed in proportion to their value. The owners of the cargo pay on the net market value at the port of destination, or where the voyage is broken up, and the goods jettisoned contribute as well as those saved, as otherwise the owner of the lost goods would be placed in a better position than the others. Seamen's wages, and the personal effects of crew and passengers, are exempt from contribution.
If the ship reaches her destination, the average must be adjusted at that port, and in accordance with the law of the place; but if the voyage is broken up, the port of loading is taken. The adjustment of averages is often a very complicated task, and is usually undertaken by persons specially engaged in that business, called average adjusters.
Much inconvenience has arisen from the want of a uniform system of general average in different countries, and an effort to establish such a system was made by an international congress, the first meeting of which took place in Glasgow in 1860 under the presidency of Lord Brougham. At a subsequent meeting at York in 1864, a code of rules was drawn up, but no practical result followed. Another important conference, however, was held at Antwerp in 1877, when the York rules were revised; and the new code, known as the York-Antwerp rules, are gradually becoming generally recognised by means of a clause inserted in bills of lading and insurance policies.
Particular Average is the partial loss of ship or cargo, or damage thereto from accidental causes. In this case the common safety is not in question, and there is consequently no contribution, the loss remaining where it falls. To such cases the term average does not seem properly to apply, but the name has become applicable to all claims for loss at sea when not total, and its use in this case may possibly be explained by the consideration that such losses under marine policies are usually made good by contribution from various underwriters or joint-insurers.
An Average Bond is sometimes entered into by the contributories in order to fix an arbiter to adjust the average.
The best treatises on the subject of average are Hopkins' Handbook of Average, and Lowndes's Law of General Average. See INSURANCE, ADJUSTMENT OF AVERAGE.
The etymology of the word has caused much discussion. It first appears about the year 1500 in connection with the maritime trade in the Mediterranean, hence the corresponding Fr. avarie, Span. averia, Port. and It. avaria, as well as in the borrowed Ger. hafarei, and Dutch avarij. The Italian form is most probably the original, from avere, 'goods;' Lat. habere, 'to have.' The It. avere is thus our old Eng. aver, 'property,' often specially in cattle, therefore 'cattle,' 'horses.' The reader of Burns will remember the word airer, 'an old horse.'