Define Sue and Labor clause.

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Asked on June 2, 2021
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By the terms of this clause, when the subject matter insured is liable to be lost or damaged, the assured is expected to act as if he was uninsured and take measures, and if necessary spend money, to try to avert or minimize any loss which might be recoverable under the policy.
In some circumstances the assured may not be too keen to do this, and so, as an encouragement, the underwriters agree to contribute, (with some provisions), to charges properly and reasonably made by the assured, and his servants or agents, to save the property.
Expenses recoverable under the sue and labour clause are known as "particular charges" (not to be confused with particular average).
Particular charges are recoverable only when: –
(a) they are incurred solely for the benefit of the subject-matter insured. (Expenses incurred in time of peril for the common benefit are general average charges);
(b) they are reasonable;
(c) they are incurred by the assured himself, or by his servants or agents. (Expenses incurred by strangers to the adventure would be salvage charges);
(d) they are incurred to avert or minimise a loss covered by the insurance. The following examples will serve as illustrations: –

Case 1. The ship has cargo on board and is earning freight. She strands, and
the master hires the services of a tug to refloat the ship and continue the voyage after necessary repairs. The cost of the tug is a general average charge, as the expenditure is reasonably and voluntarily incurred for the benefit of the common adventure in time of peril.

Case 2. The circumstances are the same as in Case 1, except that the ship is in ballast and is earning no freight. As there is no "common" adventure, general average cannot arise and the cost of the tug is a "particular charge" recoverable from underwriters under the Sue and Labour Clause.

Case 3. The ship, either with or without cargo, strands. Another ship arrives on the scene and volunteers to pull the stranded ship off and, if necessary, tow her to a place of repair. The master of the stranded ship accepts the offer. The salving ship is remunerated by a "salvage award" and the cargo owners (if any) will have to contribute their share i.e., the cargo will be liable for "salvage charges".

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Posted by seawizard
Answered on June 2, 2021