Permian Oil Corporation ships its only pump to Quality Repair Inc. for repair. Permian hires Route Shipping Inc. to take the pump to Quality and to return it as soon as the repair is complete. Permian is forced to suspend operations without the pump, but Route does not know this. Permian expects to be without the pump for five days and to lose profits of $50,000. When Route does not return the pump by the end of the fifth day, Permian rents a substitute at a cost of $1,000 per day. Route delays five more days before returning the pump. Permian files a suit against the shipping company, asking for compensatory, consequential, and punitive damages. Will Permian recover?

Yes and no. Permian will succeed in recovering damages, but not all of the damages that it seeks.
The shipping company's failure to perform promptly is a breach of contract for which Permian can recover damages. Because of the late delivery of the pump, Permian is entitled to recover the cost of renting the pump for the five days that Route delayed. Expenses that are caused directly by a breach of-such as the cost to rent the replacement pump after Route breached the contract-are recoverable as compensatory damages. These expenses were foreseeable.
Consequential damages-damages caused by special beyond the contract-are recoverable only if the breaching party knew or should have known at the time of contracting of their possibility. In this problem, Permian's shutdown of its operations is a special circumstance, but Route did not know of these circumstances so the consequent loss of profits is not recoverable.
Also, Permian cannot recover punitive damages, which are not usually recoverable in breach of contract suits. Punitive damages are intended to punish wrongdoing. The purpose of damages in a breach of contract suit is to place the nonbreaching party in the position he or she would have occupied if the contract had been performed, not to punish the breaching party.