Business Law: Principles for Today's Commercial Environment 3rd Edition by Marianne Moody Jennings, David Twomey, Marianne Jennings

Exercise 8

Potomac Leasing Co. leased an automatic telephone system to Vitality Centers. Claudene Cato signed the lease as guarantor of payments. When the rental was not paid, Potomac Leasing brought suit against Vitality and Cato. They raised the defense that the rented equipment was to be used for an illegal purpose-namely, the random sales solicitation by means of an automatic telephone in violation of state statute; that this purpose was known to Potomac Leasing; and that Potomac Leasing could therefore not enforce the lease. Was this defense valid [Potomac Leasing Co. v Vitality Centers, Inc., 718 SW2d 928 (Ark)]