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I have a Business Rule that prevents any changes to incidents and requests in closed status.  I set the rule to enforce system wide and used validate form on submission to display an error.  That is all good. 

We also wanted to hide Closed status so people wouldn’t see it as an option and become confused by that error message. It seemed like a more elegant solution. I automated moving from resolved to closed after 3 days so that shouldn’t be a problem. 

Where the problem comes in is when I click on a Closed ticket if I need to look at activities etc.  When I have Closed status hidden the closed ticket will still show ‘Closed’ in the window in upper-right.  But the Properties window Status shows ‘Open’ and I can make changes all day long, including changing status, without triggering the validation error.  

How do I fix this?

So we had this problem as well (I think), I believe our work around for it was to hide the status closed if status included (resolved,open,new,in progress,pending).  That removed closed from being a selectable option, but when the system moved it to closed, closed was still available to be viewed) You would also put this rule before the rule that uses validation since order matters in FS.