What is the consequence of discharging a contract by frustration?

Discharging a contract by frustration occurs when unforeseen circumstances make it impossible to perform the contractual obligations, thus preventing fulfillment. This principle is rooted in contract law, where frustration can arise from events beyond the parties' control, such as natural disasters, changes in law, or other significant shifts in circumstances that were not anticipated at the time the contract was made.

When a contract is frustrated, the legal effect is that the parties are relieved from their obligations under that contract. This means that neither party can hold the other liable for non-performance because the original purpose or possibility of the contract has been fundamentally altered.

The option that states it prevents the contract from being fulfilled due to unforeseen circumstances accurately captures the essence of frustration in contract law. It highlights that the very nature of frustration lies in those unpredictable events that block the performance of the contract, leading to its discharge without penalties or liabilities associated with breach, and without options for renegotiation since the fundamental nature of the contract has changed.