Average Bond Law and Legal Definition
In business an average or general average bond refers to a promise to pay general average contributions, if required. In maritime law, it refers to a cargo owner's bond exacted by a carrier to ensure that the owner will pay the general average contribution. If a general- average loss occurs during a marine voyage the carrier has a right to take part of the cargo as payment of the cargo owners' contribution to the loss. As an alternative to the possibility of losing part of the cargo, the cargo owner may take out an average bond with insurers, who agree to pay any losses arising in this way.
When there is a dispute regarding the contribution amounts, the carrier requires this bond before agreeing to unload the ship. This can also be security of payment.
