ensure quotes are expressly conditioned on supplier price validity periods and include documented assumptions.


Uniform Commercial Code Overlay: Equipment vs. Construction Contract Many specialty equipment procurements fall into a hybrid space between goods (governed by the California Commercial Code) and construction services. Manu- facturers’ terms often include: • Limitation of liability clauses. • Consequential damage waivers. • Broad excusable delay provisions. • Payment acceleration triggers. If the prime contractor has assumed


liquidated damages exposure but the manufacturer disclaims delay liability entirely, the risk gap falls on the contractor unless harmonized by negotiation. MEP subcontractors and suppliers


should review upstream obligations before accepting downstream flow-down provi- sions. A limitation of liability in a purchase order does not protect against pass-through exposure if the subcontract expands liability beyond the supplier’s terms.


Mitigation and Documentation Even where force majeure or escalation clauses exist, California courts expect diligence. Contractors must: • Provide timely written notice. • Document procurement timelines. • Demonstrate mitigation efforts (alternative sourcing, resequencing, temporary systems).


• Maintain contemporaneous cost records. Failure to strictly comply with notice


provisions can forfeit otherwise valid claims.


Commissioning and Delay Exposure In data center projects, late delivery of a single component can delay integrated


Supply chain risk in data center construction is embedded in the delivery model. California law will enforce the allocation of risk the parties negotiate, even when market conditions shiſt dramatically. Contractors and suppliers must ensure that force majeure, escalation, and liability provisions reflect current procurement realities.


systems testing and push back substantial completion. If the prime contract defines substantial completion as successful commissioning, schedule relief tied only to delivery may be insufficient. Contractors should align:


• Equipment delivery milestones. • Commissioning prerequisites. • Liquidated damages triggers. • Force majeure relief provisions. Without alignment, a 60-day trans-


former delay can cascade into extended general conditions, idle labor, and ex- posure to owner claims that exceed the value of the equipment itself.


Practical Contract Strategies For prime contractors and major trades operating in the California’s data cen- ter market, prudent risk management includes: • Negotiating specific “supply chain disruption” language in force majeure clauses.


• Securing both time and cost relief for defined escalation events.


• Using early procurement packages for long-lead equipment.


• Aligning upstream and downstream liability caps.


• Clarifying responsibility for owner-


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furnished or utility-supplied equipment.


• Requiring transparent supplier documentation supporting delay claims.


Conclusion Supply chain risk in data center construc- tion is embedded in the delivery model. California law will enforce the allocation of risk the parties negotiate, even when market conditions shift dramatically. Prime contractors, MEP subcontractors, and equipment suppliers must ensure that force majeure, escalation, and liability provisions reflect current procurement realities.


Laurence Phillips


Laurence Phillips represents contractors, developers, and public agencies in all aspects of private and public works construction, including contract negotiation, prevailing wage compliance, bid protests, and the resolution of complex project disputes through litigation and alternative dispute processes.


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