Failure conditions: According to Claude Fable, The only hard fail condition is missing a story deadline:
Deadlines: Each Palace must be completed by a fixed in-game date. Missing one triggers a game over cutscene (the protagonist is arrested and the story ends).
Safety feature: Upon this game over, the game offers to send you back roughly one week before the deadline, rather than forcing a restart from your last save. This is sufficient time to finish any Palace.
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