What is the repayment limitation if a vessel sinks?

• A. Repayment is limited to the total value of the vessel
• B. Repayment is limited to the value of the goods saved after deducting salvage costs
• C. There is no repayment required
• D. Repayment is based on the original loan amount

Answer: (B)

When a vessel sinks, the repayment limitation is based on the value of the goods that have been saved, after deducting any associated salvage costs. This principle recognizes that the owner's liability to repay a loan is not absolute but rather tied to the actual recoverable value from the disaster.

In maritime law, if a vessel is lost, the value of the goods saved becomes a critical factor in determining the financial implications for the shipowner. The owner is expected to repay only to the extent of what can be salvaged, maintaining a fair assessment of losses and ensuring that the lender does not incur losses greater than the recovery value of the remaining assets.

This principle discourages undue risk-taking and emphasizes accountability within maritime commerce, allowing for a balance between the interests of lenders and the realities faced by shipowners in distress situations.