Catching a Hallucinated Citation

A user asks "what is the termination notice period in our MSA with Acme Corp?" The assistant answers: "The notice period is 90 days, per Section 8.3 of the Acme MSA." A reviewer checks the actual contract and finds Section 8.3 says nothing about notice periods — the real clause is in Section 6.1 and specifies 60 days.

1. Explain the mechanism that most likely produced this specific failure (not just "the model hallucinated").
2. Design the grounding pipeline that would have caught this before the answer reached the user.
3. What should the system do once verification fails — and why is silently dropping the bad citation and shipping the rest of the answer the wrong choice?