The discoloration you see on this outlet is caused by electrical arcing, which is often hidden and can result from loose connections, moisture, debris, etc. When arcing occurs near wood base boards or curtains It creates a significant fire hazard, hence the use of AFCI protection. The circuit breakers in this house were upgraded with arc fault protection this outlet was found to be tripping the new breaker.

The preceding example illustrates a scenario where work performed by a seemingly high-paid professional company appears to violate several electrical code requirements. Issues include the use of a junction box that is undersized for the number of conductors present, no connectors on box, and a lack of proper support for the wiring. A more compliant installation would typically involve terminating the existing wiring in a sufficiently sized junction box and then branching the new wiring to the lighting fixtures and other devices from that point, and of course supporting all your wires in a neat and workmanship like manner as much as possible.

This was in a $6 million remodeled home. All these type of lighting fixtures are $500 a piece

I got this guy's lights working again, but this is way past the point where you need to rewire the system!

Just examining your electrical equipment you can sometimes find the problem. The discolored nut hides a loose connection thats arcing and causing electrical problems. I just bypassed this old terminal untill its replaced.