{
  "id": 12352735,
  "title": "El Niño puts business contracts under pressure as drought risks rise",
  "url": "https://urgent.news/2026/10/06/el-nino-puts-business-contracts-under-pressure-as-drought-risks-rise",
  "topic": "business",
  "section": "Business",
  "published": "2026-10-06T10:20:06.000Z",
  "source": {
    "name": "The Citizen",
    "slug": "the-citizen",
    "url": "https://www.citizen.co.za/business/el-nino-puts-business-contracts-under-pressure-as-drought-risks-rise/"
  },
  "original_language": "en",
  "account": "South Africa is bracing for the potential impacts of a strengthening El Niño cycle, with legal experts at law firm Cliffe Dekker Hofmeyr (CDH) cautioning that businesses should carefully review their contracts to allocate risk appropriately. CDH director Lucinde Rhoodie explains that while El Niño is a natural climatic phenomenon, its effects can have significant contractual implications, particularly for sectors such as agriculture, agribusiness, input suppliers, processing, and commodity trading.\n\nEl Niño events are characterized by unusually warm surface waters in the central and eastern Pacific Ocean, leading to hotter, drier conditions and increased drought risk in Southern Africa. The World Meteorological Organisation (WMO) recently forecasted an intensified El Niño, raising concerns over potential supply chain disruptions, drought, wildfires, water shortages, reduced crop yields, and livestock losses.\n\nRhoodie advises businesses to consider whether their contracts contain force majeure clauses, which can excuse or suspend performance when extraordinary events occur beyond the parties' control. Unlike ordinary commercial risks, force majeure events are truly exceptional, unforeseeable, and unavoidable. Although South African law lacks a statutory definition of force majeure, businesses can rely on express clauses or the common law doctrine of supervening impossibility of performance.\n\nHowever, Rhoodie warns that a lack of a clear force majeure clause in a contract can make it challenging to rely on such protection. Instead, a genuine objective supervening impossibility must be demonstrated. She emphasizes that a well-drafted force majeure clause should define triggering events, notice steps, mitigation duties, and consequences, providing more certainty than common law alone.\n\nCDH senior associate Liëtte van Schalkwyk notes that whether El Niño can constitute a force majeure event depends on the specific contract's wording and the case's facts. If the contract explicitly includes events such as \"natural disasters,\" \"acts of God,\" \"drought,\" or \"extreme weather events,\" there may be a stronger basis to invoke force majeure protection. The key is establishing a connection between the event and the party's inability to perform contractual obligations.\n\nTo mitigate potential El Niño risks, Van Schalkwyk advises businesses to review existing contracts, ensuring that force majeure clauses are fit for purpose and address droughts, water shortages, heatwaves, and other climate-related disruptions. They should also clarify notice requirements, mitigation obligations, and supply-chain exposure considerations. By taking these practical steps, companies can better navigate the uncertainties brought about by the strengthening El Niño cycle.",
  "summary": "El Niño is not a legal event but a recurring climatic phenomenon; however, its consequences may have significant contractual implications.",
  "key_points": [
    "El Niño cycle strengthening, impacting South Africa's business contracts",
    "CDH warns businesses to review contracts for risk allocation",
    "Force majeure clauses may provide protection for drought-related disruptions"
  ],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}