As South Africa faces the prospect of a strengthening El Niño cycle, agricultural producers, agribusinesses, input suppliers, processors and commodity traders should be paying close attention not only to weather forecasts, but also to the allocation of risk in their commercial contracts. Forecasts indicate that El Niño conditions are likely to bring hotter and drier weather to much of Southern Africa, increasing the risk of supply chain disruptions, drought, wildfires, water shortages, reduced crop yields and livestock losses.

While El Niño itself is a recurring climatic phenomenon and not a legal event, its consequences as mentioned above, may have significant contractual implications.

What is El Niño and why it is important

El Niño is a naturally occurring climate pattern characterised by unusually warm ocean temperatures in the central and eastern Pacific Ocean. Although it originates thousands of kilometres from Southern Africa, it is well known for altering global weather patterns. In Southern Africa, El Niño events are frequently associated with hotter and drier conditions, increased drought risk, water scarcity and agricultural disruption.

The name El Niño (“the little boy” or “Christ Child” in Spanish) was coined by Peruvian fishermen in the 19th century to describe a warm current that appeared around Christmas.

The most recent forecasts from the World Meteorological Organization (WMO) indicate a strengthening El Niño event, with elevated risks of above-average temperatures and shifting rainfall patterns across parts of Africa. Southern Africa may experience drought conditions, pressure on water resources and associated economic impacts.

For businesses operating in sectors such as agriculture, mining, energy, manufacturing, logistics and construction, these impacts can affect the ability to perform contractual obligations, from delivering products and services to maintaining production levels and meeting project deadlines.

One option available to parties operating, for example in the agricultural sector is to include Force Majeure clauses in its contracts.

Force Majeure clauses under South African Law

Unlike some jurisdictions, South African law does not contain a statutory definition of force majeure. Instead, parties generally rely on express force majeure clauses contained in contracts; or the common law doctrine of supervening impossibility of performance where no contractual provision exists.

Force majeure is a contractual mechanism that typically excuses or suspends performance when an extraordinary event, beyond the reasonable control of the parties, prevents one or both from carrying out their obligations. 

Unlike ordinary commercial risk (price spikes, supplier delays you could have planned for), force majeure captures the truly exceptional: events that are external, unforeseeable (or not reasonably foreseeable) and unavoidable, and that cause the impossibility of performance.

Under South African common law, in the absence of a force majeure clause in a contract, a genuine objective supervening impossibility can discharge duties. However, a clear force majeure clause is invaluable because it defines events, notice steps, mitigation duties, and consequences with far more certainty than common law alone. Subjective factors such as mere inconvenience, increased cost, reduced profitability or operational hardship will ordinarily not suffice.

Can El Niño Constitute a Force Majeure Event?

The answer is not a simple yes or no and will depend on the wording of the specific contract and the facts of each case. 

Importantly, El Niño itself is unlikely to constitute the triggering event. Rather, the relevant question is whether the consequences of El Niño fall within the scope of the force majeure clause. 

For example:

• A severe drought resulting in regulatory water restrictions.
• Flooding that damages critical transport infrastructure.
• Wildfires that destroy production facilities.
• Government-imposed emergency measures affecting operations.
• Extreme weather preventing physical access to sites or projects.

Where a clause expressly includes events such as "natural disasters", "acts of God", "drought", "extreme weather events" or similar wording, there may be a stronger basis to invoke the force majeure protection afforded in a contract. 

Whether a party is entitled to relief will depend on establishing a nexus between the event and the inability to perform.

Foreseeability May Become Increasingly Relevant

As climate-related events become more frequent and forecasts more sophisticated, businesses may face greater scrutiny when relying on force majeure provisions.

While South African force majeure clauses are primarily interpreted according to their wording, it may become more difficult to argue that climate-related disruption was entirely unforeseen where advance warnings and seasonal forecasts were available. Courts may scrutinise:

• Whether reasonable contingency planning was undertaken;
• Whether the affected party took adequate mitigation measures;
• Whether alternative means of performance were available; and
• Whether the event genuinely rendered performance impossible rather than merely more expensive or inconvenient.

The Purpose of a Force Majeure Clause

It stipulates to each party who bears which risks if performance becomes impossible due to extraordinary events and allocates the risk to a specific party. 

-It creates a roadmap (the roadmap usually consists of the notice → obligation to mitigate risk → suspension → possible termination) so parties can act promptly and predictably to ensure that there is sufficient continuity planning.

By expressly defining qualifying events and procedures up front it narrows room for disputes once the event arises.

It prevents a party from being labelled in breach where performance was objectively impossible despite reasonable efforts.

Practical Steps for Businesses

In light of growing climate volatility, organisations should consider reviewing existing contracts to determine:

Whether the force majeure clause is fit for purpose - 

Many older contracts do not expressly address droughts, water shortages, heatwaves, environmental emergencies or climate-related disruptions.

Notice requirements -

Force majeure provisions often contain strict notification obligations. Failure to provide timely notice may prejudice a party's ability to rely on the clause.

Mitigation obligations -

Most clauses require affected parties to take reasonable steps to minimise the effects of the event and resume performance as soon as possible. The farmer must then bear in mind the steps that must be taken to mitigate losses. 

Supply-chain exposure -

Businesses should evaluate whether key suppliers and subcontractors are vulnerable to drought, water restrictions, transport disruptions or energy constraints.

Climate-specific drafting - 

Future contracts may benefit from expressly addressing climate-related risks, including droughts, floods, water restrictions, wildfires and other extreme weather events.

The expected strengthening of El Niño serves as a reminder that climate risk is increasingly becoming a contractual risk. Businesses should not assume that the force majeure clauses in its contracts will automatically provide protection against weather-related disruption. The availability of relief will depend on the precise wording of the contract, the nature of the event and whether performance was genuinely prevented.

Conclusion

El Niño serves as an important reminder that climate risk and contractual risk are becoming increasingly intertwined in the agricultural sector. While severe droughts and other extreme weather events may provide a basis for invoking force majeure clauses, relief will not be automatic and will depend on the specific terms of the contract and the facts of each case.

Agricultural producers and agribusinesses should use the current forecasting window to review contracts, assess climate-related exposures and obtain the necessary legal advice to ensure that force majeure provisions adequately address the realities of modern farming. In an era of increasing climate volatility, careful contractual drafting may prove just as important as rainfall.

A proactive review of force majeure provisions, together with broader climate resilience planning, can help reduce disputes and position organisations to respond effectively when extreme weather events occur.

El Niño may not itself be a force majeure event, but its consequences may trigger contractual relief where they render performance objectively impossible and fall within the scope of the applicable force majeure clause. Businesses should review their contracts now, before disruption occurs.

Written by Lucinde Rhoodie, Director and Liëtte van Schalkwyk, Senior Associate in Dispute Resolution at Cliffe Dekker Hofmeyr