Final answer:
A contract is discharged due to frustration when an unforeseen act or event has completely or almost completely destroyed the purpose of the contract. The occurrence must change the nature of the contractual obligations to an extent that it would be unjust to enforce the original terms. This automatically releases both parties from future obligations without the need for any party to take action.
Step-by-step explanation:
To determine which element is needed for a discharge of a contract due to frustration, one needs a clear understanding of the concept of contractual frustration. Contractual frustration occurs when an unforeseen event arises, making it impossible to fulfill the terms of the contract. From the options provided, the correct answer would be: An unforeseen act or event has completely or almost completely destroyed the purpose of the contract.
This event should neither be caused by the parties involved in the contract nor should it have been foreseeable. If it was foreseen, or could have been foreseen, the defense of frustration is typically unavailable. The occurrence must so significantly change the nature of the outstanding contractual rights or obligations that it would be unjust to hold the parties to the original agreement. Examples include war, changes in the law which make the contract illegal, or the death or incapacity of a key party necessary to contract performance.
It's critical to differentiate between mere inconvenience or increased difficulty, which are insufficient for contractual frustration, and events that strike at the root of the consideration or purpose of the contract, rendering performance radically different from what was agreed upon. Thus, frustration automatically discharges both parties from their future obligations under the contract, without the need for action by any party.