diff --git a/libs/agent/chat/service.rs b/libs/agent/chat/service.rs
index 150cc8c..272699e 100644
--- a/libs/agent/chat/service.rs
+++ b/libs/agent/chat/service.rs
@@ -5,7 +5,9 @@ use async_openai::Client;
 use async_openai::types::chat::{
     ChatCompletionMessageToolCalls, ChatCompletionRequestAssistantMessage,
     ChatCompletionRequestAssistantMessageContent, ChatCompletionRequestMessage,
-    ChatCompletionRequestSystemMessage, ChatCompletionRequestUserMessage, ChatCompletionTool,
+    ChatCompletionRequestSystemMessage, ChatCompletionRequestToolMessage,
+    ChatCompletionRequestToolMessageContent, ChatCompletionRequestUserMessage,
+    ChatCompletionRequestUserMessageContent, ChatCompletionTool,
     ChatCompletionTools, CreateChatCompletionRequest, CreateChatCompletionResponse,
     CreateChatCompletionStreamResponse, FinishReason, ReasoningEffort, ToolChoiceOptions,
 };
@@ -193,7 +195,24 @@ impl ChatService {
                             .collect();
 
                         if !calls.is_empty() {
-                            let tool_messages = self.execute_tool_calls(calls, &request).await?;
+                            let tool_messages = match self.execute_tool_calls(calls, &request).await {
+                                Ok(msgs) => msgs,
+                                Err(e) => {
+                                    // Surface the error as a tool result so the model can continue
+                                    let err_text = format!("[Tool call failed: {}]", e);
+                                    messages.push(ChatCompletionRequestMessage::User(
+                                        ChatCompletionRequestUserMessage {
+                                            content: ChatCompletionRequestUserMessageContent::Text(err_text.clone()),
+                                            name: None,
+                                        },
+                                    ));
+                                    tool_depth += 1;
+                                    if tool_depth >= max_tool_depth {
+                                        return Ok(err_text);
+                                    }
+                                    continue;
+                                }
+                            };
                             messages.extend(tool_messages);
 
                             tool_depth += 1;
@@ -387,7 +406,25 @@ impl ChatService {
                         },
                     ));
 
-                    let tool_messages = self.execute_tool_calls(tool_calls, &request).await?;
+                    let tool_messages = match self.execute_tool_calls(tool_calls, &request).await {
+                        Ok(msgs) => msgs,
+                        Err(e) => {
+                            // Stream the FC error as an observation so the user sees it
+                            let err_text = format!("[Tool call failed: {}]", e);
+                            on_chunk(AiStreamChunk {
+                                content: err_text.clone(),
+                                done: true,
+                            })
+                            .await;
+                            // Return an empty tool result so the loop can continue
+                            vec![ChatCompletionRequestMessage::Tool(
+                                ChatCompletionRequestToolMessage {
+                                    tool_call_id: String::new(),
+                                    content: ChatCompletionRequestToolMessageContent::Text(err_text),
+                                },
+                            )]
+                        }
+                    };
                     messages.extend(tool_messages);
 
                     tool_depth += 1;