GENCON General Average

GENCON Clause 12 covers General Average. Another expression with a long history and now covered by an international convention (The York-Antwerp Rules). In essence, General Average is the procedure whereby if the ship is involved in extraordinary expense in order to avoid damage to the ship and her cargo then the cargo as well as the shipowner contributes to that expenditure; the formal wording reads ‘…. preserving from peril the property involved in the common maritime
venture’. The York-Antwerp Rules lay down how the various parties’ contributions will be calculated, a procedure known as Average Adjusting. All prudent merchants are careful to include General Average in their insurance cover. Shipbrokers would not forgive us for leaving this guided tour of a charter party without mentioning ‘brokerage’ (see clause 15). Brokerage is the commission due to the broker or brokers involved in the fixture, and is their reward for succeeding in
bringing the negotiations to a satisfactory conclusion. The amount of brokerage involved is usually between one and quarter (1¼%) and two and a half (2½%) percent of the gross freight, depending on whether one or more brokers are involved. Most
charter parties, including GENCON 94 now include brokerage on demurrage and on ‘dead freight’ (freight paid on cargo not supplied by the charterers which should have been). Do not feel unduly distressed if you have trouble understanding such clauses as the Both to Blame Collision Clause (clause 11). It is unlikely to have any direct impact on chartering brokers and is generally accepted as being a vital component of a charter party but almost incomprehensible to mere mortals.