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Abandonment And Salvage

What is 'Abandonment And Salvage'

An expression that describes the forfeiture of property and the ensuing claim over that property by a second party. Abandonment and salvage can be added as a clause in an insurance contract; this gives the insurance company the ability to accept the abandoned property. Abandonment must be expressed with intent. The potential financial rewards mean that salvage rights are sometimes legally contested by several parties.

Explaining 'Abandonment And Salvage'

Salvage and abandonment clauses are usually found in marine insurance contracts. For example, if a vessel sinks and the owner thinks it would be too expensive to reclaim the ship, he or she could declare it abandoned. The insurance company could then claim ownership and salvage rights to the sunken ship. Advancements in technology have made it possible and financially viable to reach previously inaccessible wrecks, resulting in increased salvage claims.


Further Reading


Real options and interactions with financial flexibility
www.jstor.org [PDF]
… 10 option to abandon (ie, to switch from one use to another) is like an 'option on an option': if the project is abandoned before its economic life is over, its salvage value includes the value of terminating its next tour of duty, and the next user gets another abandonment option …

Abandonment value and project lifeAbandonment value and project life
books.google.com [PDF]
… 10 option to abandon (ie, to switch from one use to another) is like an 'option on an option': if the project is abandoned before its economic life is over, its salvage value includes the value of terminating its next tour of duty, and the next user gets another abandonment option …

Strategic parameters for capital budgeting when abandonment value is stochasticStrategic parameters for capital budgeting when abandonment value is stochastic
www.tandfonline.com [PDF]
… 10 option to abandon (ie, to switch from one use to another) is like an 'option on an option': if the project is abandoned before its economic life is over, its salvage value includes the value of terminating its next tour of duty, and the next user gets another abandonment option …

The nature of option interactions and the valuation of investments with multiple real optionsThe nature of option interactions and the valuation of investments with multiple real options
www.jstor.org [PDF]
… 10 option to abandon (ie, to switch from one use to another) is like an 'option on an option': if the project is abandoned before its economic life is over, its salvage value includes the value of terminating its next tour of duty, and the next user gets another abandonment option …

Making use of real options simple: An overview and applications in flexible/modular decision makingMaking use of real options simple: An overview and applications in flexible/modular decision making
www.tandfonline.com [PDF]
… 10 option to abandon (ie, to switch from one use to another) is like an 'option on an option': if the project is abandoned before its economic life is over, its salvage value includes the value of terminating its next tour of duty, and the next user gets another abandonment option …

Investment and abandonment decisions with uncertain price and costInvestment and abandonment decisions with uncertain price and cost
onlinelibrary.wiley.com [PDF]
… 10 option to abandon (ie, to switch from one use to another) is like an 'option on an option': if the project is abandoned before its economic life is over, its salvage value includes the value of terminating its next tour of duty, and the next user gets another abandonment option …

A log-transformed binomial numerical analysis method for valuing complex multi-option investmentsA log-transformed binomial numerical analysis method for valuing complex multi-option investments
www.jstor.org [PDF]
… 10 option to abandon (ie, to switch from one use to another) is like an 'option on an option': if the project is abandoned before its economic life is over, its salvage value includes the value of terminating its next tour of duty, and the next user gets another abandonment option …

Economics of UK Field AbandonmentEconomics of UK Field Abandonment
www.onepetro.org [PDF]
… 10 option to abandon (ie, to switch from one use to another) is like an 'option on an option': if the project is abandoned before its economic life is over, its salvage value includes the value of terminating its next tour of duty, and the next user gets another abandonment option …



Q&A About Abandonment And Salvage


How does one express abandonment with intent?

One must state their intention to abandon the ship or item.

What happens if there are multiple parties contesting for salvage rights?

The courts will decide who gets the salvage rights.

Why are there increased salvage claims?

Increased salvage claims are due to increased accessibility of wrecks.

How do advances in technology make it financially viable to reach previously inaccessible wrecks?

Advances in technology make it financially viable because they allow for the retrieval of valuable cargo from these ships, which can then be sold at a profit.

What is abandonment and salvage?

Abandonment and Salvage is the forfeiture of property to a second party.

Who can claim abandoned property?

The insurance company can claim abandoned property.

What advancements have made it possible to reach previously inaccessible wrecks?

Advances in technology have made it possible to reach previously inaccessible wrecks.

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