Abstract: A system and method are provided for managing faults in position sensing device and shift device; such faults are the unwarranted code change, power loss fault, and channel fault. The faults correspond to those that either turn it on without a command from the controller or those that do not allow it to turn on despite a command from the controller. The limited operation actions under these fault conditions constitute disabling shifting, enabling shifting until a main-stop is reached, and/or railing on two-wheel side. There are alternatives in reset mechanism, namely, maintaining the limited operation mode until service, reset upon ignition key going from OFF to RUN, key going from START to RUN, or a simple change in Mode Select Switch after limited operation action of the controller, etc. Auto-reset under conditions of auto-fault recovery are also included.