Illarion.org

Does failing a quest have any actual negative effects? Like, do I lose reputation in that faction? (I notice completing quests raises reputation, or whatever it's called) And can I try the quest again? Thanks.

You do not lose reputation by failing a NPC quest. This might not hold for quests you got personally from your faction leader. Actually, there are few quests you can really fail in and those are usually repeatable. So, those quests with a time limit are usually repeatable but under different circumstances.

Since most quests are like "get items, kill monsters, go to a place, use item,..." there is not a high chance you can fail in them. Quests without a time limit you can, well, fail to finish, but you there is no way you can "end" them without solving them.

This information might chance in future and represents the current state.