fix(coding-agent): handle auto-compaction failures gracefully

When auto-compaction fails (e.g., quota exceeded), emit the error via
the auto_compaction_end event instead of throwing. The UI now displays
the error message, allowing users to take action (switch models, wait
for quota reset, etc.) instead of crashing.

fixes #792

packages/coding-agent/CHANGELOG.md

@@ -14,6 +14,7 @@
 
 ### Fixed
 
+- Fixed crash during auto-compaction when summarization fails (e.g., quota exceeded). Now displays error message instead of crashing ([#792](https://github.com/badlogic/pi-mono/issues/792))
 - Fixed `--no-extensions` flag not preventing extension discovery ([#776](https://github.com/badlogic/pi-mono/issues/776))
 - Fixed extension messages rendering twice on startup when `pi.sendMessage({ display: true })` is called during `session_start` ([#765](https://github.com/badlogic/pi-mono/pull/765) by [@dannote](https://github.com/dannote))
 - Fixed `PI_CODING_AGENT_DIR` env var not expanding tilde (`~`) to home directory ([#778](https://github.com/badlogic/pi-mono/pull/778) by [@aliou](https://github.com/aliou))

packages/coding-agent/docs/rpc.md

@@ -795,6 +795,8 @@ If `reason` was `"overflow"` and compaction succeeds, `willRetry` is `true` and
 
 If compaction was aborted, `result` is `null` and `aborted` is `true`.
 
+If compaction failed (e.g., API quota exceeded), `result` is `null`, `aborted` is `false`, and `errorMessage` contains the error description.
+
 ### auto_retry_start / auto_retry_end
 
 Emitted when automatic retry is triggered after a transient error (overloaded, rate limit, 5xx).

packages/coding-agent/src/core/agent-session.ts

@@ -62,7 +62,13 @@ import type { BashOperations } from "./tools/bash.js";
 export type AgentSessionEvent =
 	| AgentEvent
 	| { type: "auto_compaction_start"; reason: "threshold" | "overflow" }
-	| { type: "auto_compaction_end"; result: CompactionResult | undefined; aborted: boolean; willRetry: boolean }
+	| {
+			type: "auto_compaction_end";
+			result: CompactionResult | undefined;
+			aborted: boolean;
+			willRetry: boolean;
+			errorMessage?: string;
+	  }
 	| { type: "auto_retry_start"; attempt: number; maxAttempts: number; delayMs: number; errorMessage: string }
 	| { type: "auto_retry_end"; success: boolean; attempt: number; finalError?: string };
 
@@ -1544,13 +1550,17 @@ export class AgentSession {
 				}, 100);
 			}
 		} catch (error) {
-			this._emit({ type: "auto_compaction_end", result: undefined, aborted: false, willRetry: false });
+			const errorMessage = error instanceof Error ? error.message : "compaction failed";
-
+			this._emit({
-			if (reason === "overflow") {
+				type: "auto_compaction_end",
-				throw new Error(
+				result: undefined,
-					`Context overflow: ${error instanceof Error ? error.message : "compaction failed"}. Your input may be too large for the context window.`,
+				aborted: false,
-				);
+				willRetry: false,
-			}
+				errorMessage:
+					reason === "overflow"
+						? `Context overflow recovery failed: ${errorMessage}`
+						: `Auto-compaction failed: ${errorMessage}`,
+			});
 		} finally {
 			this._autoCompactionAbortController = undefined;
 		}

packages/coding-agent/src/modes/interactive/interactive-mode.ts

@@ -1820,6 +1820,10 @@ export class InteractiveMode {
 						timestamp: Date.now(),
 					});
 					this.footer.invalidate();
+				} else if (event.errorMessage) {
+					// Compaction failed (e.g., quota exceeded, API error)
+					this.chatContainer.addChild(new Spacer(1));
+					this.chatContainer.addChild(new Text(theme.fg("error", event.errorMessage), 1, 0));
 				}
 				void this.flushCompactionQueue({ willRetry: event.willRetry });
 				this.ui.requestRender();