From eb673790338d3c977e1744e88280e8289cbb6bf7 Mon Sep 17 00:00:00 2001
From: alliscode <bentho@microsoft.com>
Date: Fri, 3 Apr 2026 11:17:21 -0700
Subject: [PATCH] Catch agent errors and emit response.failed with real error
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Previously, unhandled exceptions from agent execution would bubble up
to the SDK orchestrator, which emits a generic 'An internal server
error occurred.' message — hiding the actual cause (e.g., 401 auth
failures, model not found, etc.).

Now AgentFrameworkResponseHandler catches non-cancellation exceptions
and emits a proper response.failed event containing the real error
message, making it visible to clients and in logs.

OperationCanceledException still propagates for proper cancellation
handling by the SDK.

Also bumps package version to 0.9.0-hosted.260403.2.

Co-authored-by: Copilot <223556219+Copilot@users.noreply.github.com>
---
 dotnet/nuget/nuget-package.props              |  2 +-
 .../FoundryResponsesHosting.csproj            |  2 +-
 .../Hosting/AgentFrameworkResponseHandler.cs  | 21 +++++++++++++++++++
 .../AgentFrameworkResponseHandlerTests.cs     | 19 ++++++++++-------
 4 files changed, 35 insertions(+), 9 deletions(-)

diff --git a/dotnet/nuget/nuget-package.props b/dotnet/nuget/nuget-package.props
index 6d1c657fa8..2cbd1356bc 100644
--- a/dotnet/nuget/nuget-package.props
+++ b/dotnet/nuget/nuget-package.props
@@ -8,7 +8,7 @@
     <PackageVersion Condition="'$(IsReleaseCandidate)' != 'true' AND '$(VersionSuffix)' == ''">$(VersionPrefix)-preview.260402.1</PackageVersion>
     <PackageVersion Condition="'$(IsReleased)' == 'true'">$(VersionPrefix)</PackageVersion>
     <!-- Branch-specific override to distinguish from mainline packages -->
-    <PackageVersion>0.9.0-hosted.260403.1</PackageVersion>
+    <PackageVersion>0.9.0-hosted.260403.2</PackageVersion>
     <GitTag>1.0.0</GitTag>
 
     <Configurations>Debug;Release;Publish</Configurations>
diff --git a/dotnet/samples/04-hosting/FoundryResponsesHosting/FoundryResponsesHosting.csproj b/dotnet/samples/04-hosting/FoundryResponsesHosting/FoundryResponsesHosting.csproj
index 3dfab4ad48..269754203d 100644
--- a/dotnet/samples/04-hosting/FoundryResponsesHosting/FoundryResponsesHosting.csproj
+++ b/dotnet/samples/04-hosting/FoundryResponsesHosting/FoundryResponsesHosting.csproj
@@ -6,7 +6,7 @@
     <Nullable>enable</Nullable>
     <ImplicitUsings>enable</ImplicitUsings>
     <CentralPackageTransitivePinningEnabled>false</CentralPackageTransitivePinningEnabled>
-    <NoWarn>$(NoWarn);NU1903;NU1605</NoWarn>
+    <NoWarn>$(NoWarn);NU1903;NU1605;MAAIW001</NoWarn>
   </PropertyGroup>
 
   <ItemGroup>
diff --git a/dotnet/src/Microsoft.Agents.AI.Foundry/Hosting/AgentFrameworkResponseHandler.cs b/dotnet/src/Microsoft.Agents.AI.Foundry/Hosting/AgentFrameworkResponseHandler.cs
index 3423a0b4a3..eaacbc67a3 100644
--- a/dotnet/src/Microsoft.Agents.AI.Foundry/Hosting/AgentFrameworkResponseHandler.cs
+++ b/dotnet/src/Microsoft.Agents.AI.Foundry/Hosting/AgentFrameworkResponseHandler.cs
@@ -95,6 +95,7 @@ public class AgentFrameworkResponseHandler : ResponseHandler
             while (true)
             {
                 bool shutdownDetected = false;
+                ResponseStreamEvent? failedEvent = null;
                 ResponseStreamEvent? evt = null;
                 try
                 {
@@ -109,6 +110,26 @@ public class AgentFrameworkResponseHandler : ResponseHandler
                 {
                     shutdownDetected = true;
                 }
+                catch (Exception ex) when (ex is not OperationCanceledException && !emittedTerminal)
+                {
+                    // Catch agent execution errors and emit a proper failed event
+                    // with the real error message instead of letting the SDK emit
+                    // a generic "An internal server error occurred."
+                    if (this._logger.IsEnabled(LogLevel.Error))
+                    {
+                        this._logger.LogError(ex, "Agent execution failed for response {ResponseId}.", context.ResponseId);
+                    }
+
+                    failedEvent = stream.EmitFailed(
+                        ResponseErrorCode.ServerError,
+                        ex.Message);
+                }
+
+                if (failedEvent is not null)
+                {
+                    yield return failedEvent;
+                    yield break;
+                }
 
                 if (shutdownDetected)
                 {
diff --git a/dotnet/tests/Microsoft.Agents.AI.Foundry.UnitTests/Hosting/AgentFrameworkResponseHandlerTests.cs b/dotnet/tests/Microsoft.Agents.AI.Foundry.UnitTests/Hosting/AgentFrameworkResponseHandlerTests.cs
index dc38c42739..b1bdd31916 100644
--- a/dotnet/tests/Microsoft.Agents.AI.Foundry.UnitTests/Hosting/AgentFrameworkResponseHandlerTests.cs
+++ b/dotnet/tests/Microsoft.Agents.AI.Foundry.UnitTests/Hosting/AgentFrameworkResponseHandlerTests.cs
@@ -538,7 +538,7 @@ public class AgentFrameworkResponseHandlerTests
     }
 
     [Fact]
-    public async Task CreateAsync_AgentThrows_ExceptionPropagates()
+    public async Task CreateAsync_AgentThrows_EmitsFailedEventWithErrorMessage()
     {
         // Arrange
         var agent = new ThrowingAgent(new InvalidOperationException("Agent crashed"));
@@ -561,13 +561,18 @@ public class AgentFrameworkResponseHandlerTests
         mockContext.Setup(x => x.GetInputItemsAsync(It.IsAny<CancellationToken>()))
             .ReturnsAsync(Array.Empty<OutputItem>());
 
-        // Act & Assert
-        await Assert.ThrowsAsync<InvalidOperationException>(async () =>
+        // Act — collect all events
+        var events = new List<ResponseStreamEvent>();
+        await foreach (var evt in handler.CreateAsync(request, mockContext.Object, CancellationToken.None))
         {
-            await foreach (var _ in handler.CreateAsync(request, mockContext.Object, CancellationToken.None))
-            {
-            }
-        });
+            events.Add(evt);
+        }
+
+        // Assert — should contain created, in_progress, and failed (with real error message)
+        Assert.Contains(events, e => e is ResponseCreatedEvent);
+        Assert.Contains(events, e => e is ResponseInProgressEvent);
+        var failedEvent = Assert.Single(events.OfType<ResponseFailedEvent>());
+        Assert.Contains("Agent crashed", failedEvent.Response.Error.Message);
     }
 
     [Fact]