Well, the quest fails, but you get some different consequences (the forest changes, spawning slimes, the lumberjacks leave as well), and it benefits the Zanti family (it damages the business interests of their rivals, the League of Merchants), so it's not all doom and gloom.
Viewing post in Caliross, The Shapeshifter's Legacy comments
There is only a handful of quests which fail, and usually it's only because you didn't finish them before going to the following chapter.
Maybe I can change the quest to be marked as a success if you don't complete it because you are a cowgirl, but the consequences would be the same (and it would be odd to mark it as a success, since you can't reap the rewards from the guild).
I've never made it to chapter 2.
I'm thinking that instead of "in progress", "success" , and "failure" you replace "success" with "completed" and "failure" with "incomplete".
This way, if you don't finish a quest before passing to a chapter where you no longer have a means to finish it, it gets marked "incomplete", meaning you're no longer in the progress of doing the quest, but it was never finished.
But even if you 'fail' the quest, so long as it has been resolved, it has been "completed"; you've seen the quest to it's end.
Does that make sense…?