Jake enters into a long-term agreement to lease machinery to manufacture extruded piping. The lease provides that it is for seven years, that Jake is responsible for maintenance and upkeep of the machinery, that instalments of $1000 per month are payable promptly in advance and that no warranty is given as to the suitability of the machinery for Jake's purpose.

After 12 months the government passes theManufacturing (Control) Actto prohibit the manufacture of proclaimed items unless the manufacturer is the holder of a licence. Extruded piping is a proclaimed item. Jake applies for a licence but is unsuccessful. He wants to get out of the lease and seeks your advice.

Advise Jake. Would your answer differ if Jake were able to get a licence but at a cost of $15,000 which he says makes his contract uneconomical?