fix(core): retry on failed as well as timeout; only auth stops the run (#104)

Co-authored-by: Claude Opus 5 (1M context) <noreply@anthropic.com>

packages/docs/content/agent-loop.en.md

@@ -25,7 +25,7 @@ session.run(newMessages, { approve, signal })
 │    │     Environment.executeTool ──► runs concurrently,       │
 │    │                                 output streams back      │
 │    └─ LLMOutcome:                                             │
-│         timeout / malformed ──► reconnect within the turn     │
+│    failed/timeout/malformed ──► reconnect within the turn     │
 │                    (≤5, with [turn_retried]; tools not rerun) │
 │  token_usage + request_end (at LLM-stream end; not waiting   │
 │                              for tools)                       │
@@ -91,7 +91,7 @@ While a Task is running, the host can queue a user message with `session.steer(t
 
 ## Automatic reconnect
 
-Only LLM-side `timeout` (network timeouts, transport disconnects such as a dropped socket, rate limits, 5xx, and transient provider quota/subscription errors like `insufficient_user_quota`) and `malformed` (truncated streams, JSON parse failures) trigger an in-run reconnect: the engine re-sends the original input plus a `[turn_retried]` block carrying the previous partial output, so tools are never re-executed. Default limit is 5 reconnects with exponential backoff under a ceiling (base 250ms, cap 30s: 250ms, 500ms, 1s, 2s, 4s ≈ 7.75s of total patience — one shared schedule growing toward the slower retryable classes, with the first steps as fast as a transport blip needs); beyond that the turn settles as `failed`. Each failure's `request_end` announces the planned wait as `retry_in_ms` (same formula as the sleep), which the Web App renders as a live countdown with "retry now" (skips the remaining wait via `Session.skipReconnectWait` — the attempt counter is unchanged) and "give up" (the ordinary abort; the engine's abort-during-backoff path ends the turn) controls. Compaction requests use their own tighter cap (3 retries): a failed compaction keeps the original context and retries on the next trigger, so failing fast beats stalling the session. Authentication errors are classified before any retry heuristic and never retry: the request ends with its own terminal status `auth` (only the model reference is fixed at Session creation — credentials are read from the current Project config when the Session loads), and the Web App disables that Session's composer until the model's credential is updated (which auto-unlocks it) or the notice is dismissed for a retry. Tool errors are never retried — they are fed back to the model as `tool_call_output` and the model decides what to do next.
+Every LLM-side failure except `auth` triggers an in-run reconnect — `timeout` (network timeouts, transport disconnects, rate limits, 5xx, transient provider quota errors), `malformed` (truncated streams, JSON parse failures), and **`failed` as well**. `failed` retries even though the classifier judged it non-transient: that judgement is an allowlist of known codes, statuses and message vocabulary, so a gateway phrasing a transient fault its own way (`Upstream HTTP/2 stream failed`, say) lands there and used to kill the turn. Retrying a genuinely permanent error costs the ladder and ends the same way; aborting a transient one destroys the turn. Note this changes the *policy*, not the *taxonomy*: a `failed` request is still recorded as `failed` on its `request_end` and in the Cost center, rather than being relabelled a timeout. On a reconnect the engine re-sends the original input plus a `[turn_retried]` block carrying the previous partial output, so tools are never re-executed. Default limit is 5 reconnects with exponential backoff under a ceiling (base 250ms, cap 30s: 250ms, 500ms, 1s, 2s, 4s ≈ 7.75s of total patience — one shared schedule growing toward the slower retryable classes, with the first steps as fast as a transport blip needs); beyond that the turn settles as `failed`. Each failure's `request_end` announces the planned wait as `retry_in_ms` (same formula as the sleep), which the Web App renders as a live countdown with "retry now" (skips the remaining wait via `Session.skipReconnectWait` — the attempt counter is unchanged) and "give up" (the ordinary abort; the engine's abort-during-backoff path ends the turn) controls; the CLI prints its own `[retry]` line. All three retryable statuses render identically — a retry the user cannot see is a stalled session with no explanation and no way out. Compaction requests retry the same statuses under their own tighter cap (3 retries): a compaction that gives up keeps the original context and tries again at the next trigger, so a short ladder there beats stalling the session behind the full one. Authentication errors are classified before any retry heuristic and never retry: the request ends with its own terminal status `auth` (only the model reference is fixed at Session creation — credentials are read from the current Project config when the Session loads), and the Web App disables that Session's composer until the model's credential is updated (which auto-unlocks it) or the notice is dismissed for a retry. Tool errors are never retried — they are fed back to the model as `tool_call_output` and the model decides what to do next.
 
 ## Compaction
 
@@ -116,7 +116,7 @@ Three triggers (`compaction_begin.reason`):
 
 Two modes: `summarize` (default) appends the compaction Prompt to the old context, extracts the `[summary]`, wraps it as a `[context_summary]` user text and continues in a **fresh model context**; `discard` simply drops the old context. System markers are written as `[tag]…[/tag]`; the earlier angle-bracket form (`<summary>`, `<context_summary>`, …) is still recognized when reading old Traces and old persisted compaction prompts. Compaction rotates the [Trace file](/sessions-and-traces) (`_002`, `_003`, …) — one Trace file always equals one complete model context. `compactability()` probes feasibility before `session.compact()` (`ok | unsupported | empty | just_compacted`).
 
-The compaction request keeps the session's toolset **unchanged** — the request prefix (tool list included) stays byte-identical to ordinary turns, so the provider's prompt cache remains valid at the moment the context is largest. Compaction still succeeds only with a valid summary: a response that calls a tool or whose extracted summary is empty is rejected — any tool calls are answered with synthesized failed outputs (keeping `tool_use`/`tool_result` pairing intact) and the repaired request is resent immediately (a rejection is model behavior, not a transport failure, so no backoff applies), up to 5 rejected attempts; then the compaction ends `failed`, keeping the original context and Trace file until the next trigger. Transport `timeout`/`malformed` attempts follow the compaction-specific reconnect cap and backoff ladder described under "Automatic reconnect" above. The first **committed** attempt — adopted or rejected — also absorbs whatever turn input was folded into the compaction request (mid-task tool results, or the carry-over a manual `/compact` folds in) into the old context's history: retries resend only the repairs and the Prompt, and the continuation after an abandoned compaction never resends the absorbed input.
+The compaction request keeps the session's toolset **unchanged** — the request prefix (tool list included) stays byte-identical to ordinary turns, so the provider's prompt cache remains valid at the moment the context is largest. Compaction still succeeds only with a valid summary: a response that calls a tool or whose extracted summary is empty is rejected — any tool calls are answered with synthesized failed outputs (keeping `tool_use`/`tool_result` pairing intact) and the repaired request is resent immediately (a rejection is model behavior, not a transport failure, so no backoff applies), up to 5 rejected attempts; then the compaction ends `failed`, keeping the original context and Trace file until the next trigger. Retryable attempts (`failed`/`timeout`/`malformed`, the same set the turn loop retries) follow the compaction-specific reconnect cap and backoff ladder described under "Automatic reconnect" above; only `auth` stops the compaction at once. The first **committed** attempt — adopted or rejected — also absorbs whatever turn input was folded into the compaction request (mid-task tool results, or the carry-over a manual `/compact` folds in) into the old context's history: retries resend only the repairs and the Prompt, and the continuation after an abandoned compaction never resends the absorbed input.
 
 ## Concurrency model