Commentary-18
The Failure Event provisions are analogous to directors' liability under corporate law. They are intended to address situations in which a person with decision-making authority in a DAO acts in bad faith or, through gross negligence, causes a technical failure that harms Members, Participants, or the general public. As with director liability, there is not an expectation that a person's decisions or actions will be perfect, but they must be taken with the best interests of the DAO in mind and fall within a reasonable range of possible decisions or actions.
After a Failure Event, legal personality and limited liability will typically be maintained in order to protect the interests of the DAO Members and Participants. For example, in the case of a hack, a person who can be said to have acted in bad faith or through gross negligence may face liability for losses incurred in the Failure Event, but DAO Members and Participants who simply took part would still be shielded by the DAO's legal personhood and limited liability.