I believe you missed a semicolon after `exit 1` and before `}`. `}` closes the opening `{` only at the start of a command (POSIX rules; don't remember now if bash recognizes it when it's just a command argument).

▲ xorcist an hour ago | parent | next [-]

In this specific case, echo can't fail to there's no need for any of that:

  [ -z "$1" ] && echo "fail" >&2 && exit 1

	▲	layer8 36 minutes ago \| parent [-]
		Echo will fail here when stderr is closed. For example when the caller of the script pipes stderr to another command and that command exits.

▲ archargelod an hour ago | parent | prev [-]

I'm just too used to how parsing works in Zsh. For bash and sh, there is indeed should be a semicolon.