diff --git a/pkg/agent/core.go b/pkg/agent/core.go
index d5b7fda..6bcdbe1 100644
--- a/pkg/agent/core.go
+++ b/pkg/agent/core.go
@@ -796,6 +796,12 @@ func (s *agent) executeTurn(ctx context.Context, input string, handler EventHand
 			fmt.Sscanf(ev.Content, "%d %d %d %g", &in, &out, &est, &costUSD)
 			s.session.addUsage(backend.Usage{InputTokens: in, OutputTokens: out, CostUSD: costUSD}, est != 0)
 			s.notifyChange()
+			if maxCostStr := os.Getenv("OLLIE_MAX_SESSION_COST"); maxCostStr != "" {
+				if limit, ferr := strconv.ParseFloat(maxCostStr, 64); ferr == nil && limit > 0 && s.session.SessionCostUSD >= limit {
+					handler(infoEvent(fmt.Sprintf("spending cap $%.2f reached — stopping", limit)))
+					s.Interrupt(ErrInterrupted)
+				}
+			}
 		}
 		handler(ev)
 	}
@@ -860,12 +866,64 @@ func (s *agent) executeTurn(ctx context.Context, input string, handler EventHand
 		}
 	}
 
+	// Spending cap: reject before spending more tokens.
+	if maxCostStr := os.Getenv("OLLIE_MAX_SESSION_COST"); maxCostStr != "" && s.session != nil {
+		if limit, err := strconv.ParseFloat(maxCostStr, 64); err == nil && limit > 0 {
+			if s.session.SessionCostUSD >= limit {
+				handler(Event{Role: "error", Content: fmt.Sprintf("spending cap $%.2f reached (session total $%.4f)", limit, s.session.SessionCostUSD)})
+				s.setState("idle")
+				actCancel(nil)
+				s.currentAction.CompareAndSwap(handle, nil)
+				if snapSession == nil {
+					s.session = nil
+				} else {
+					s.session.messages = snapMessages
+				}
+				return ""
+			}
+		}
+	}
+
 	if s.session != nil {
 		s.session.resetTurnAccumulators()
 	}
-	err := run(actCtx, s.cfg, s.session)
-	actCancel(nil)
-	s.currentAction.CompareAndSwap(handle, nil)
+
+	// Run the turn, retrying once after compaction on context overflow.
+	var (
+		overflowRetried bool
+		err             error
+	)
+	for {
+		err = run(actCtx, s.cfg, s.session)
+		actCancel(nil)
+		s.currentAction.CompareAndSwap(handle, nil)
+
+		if err == nil {
+			break
+		}
+		if errors.Is(err, context.Canceled) || errors.Is(err, ErrInterrupted) {
+			break
+		}
+		var ctxErr *backend.ContextOverflowError
+		if !overflowRetried && errors.As(err, &ctxErr) && s.session != nil {
+			overflowRetried = true
+			s.session.messages = snapMessages
+			emit(s.cfg, Event{Role: "info", Content: "context overflow — compacting and retrying...\n"})
+			s.setState("compacting")
+			if _, cerr := s.runCompact(ctx, "overflow", handler); cerr != nil {
+				break
+			}
+			s.session.appendUserMessage(input)
+			s.setState("thinking")
+			s.session.resetTurnAccumulators()
+			replyBuf.Reset()
+			actCtx, actCancel = context.WithCancelCause(ctx)
+			handle = &actionHandle{cancel: actCancel}
+			s.currentAction.Store(handle)
+			continue
+		}
+		break
+	}
 
 	s.mu.Lock()
 	s.reply = replyBuf.String()
diff --git a/pkg/backend/backend.go b/pkg/backend/backend.go
index 723124f..1af07da 100644
--- a/pkg/backend/backend.go
+++ b/pkg/backend/backend.go
@@ -9,6 +9,7 @@ import (
 	"fmt"
 	"io"
 	"net/http"
+	"strings"
 	"time"
 )
 
@@ -78,6 +79,14 @@ type TransientError struct {
 
 func (e *TransientError) Error() string { return e.Message }
 
+// ContextOverflowError is returned when the request exceeds the model's
+// context window. The caller should compact history and retry.
+type ContextOverflowError struct {
+	Message string
+}
+
+func (e *ContextOverflowError) Error() string { return e.Message }
+
 // GenerationParams controls sampling behaviour for a single ChatStream call.
 // Zero values mean "use the API default".
 type GenerationParams struct {
@@ -131,7 +140,11 @@ func streamRequest(client *http.Client, req *http.Request, label string, parseFn
 	if resp.StatusCode != http.StatusOK {
 		body, _ := io.ReadAll(resp.Body)
 		resp.Body.Close()
-		return nil, fmt.Errorf("%s HTTP %d: %s", label, resp.StatusCode, body)
+		msg := string(body)
+		if resp.StatusCode == http.StatusBadRequest && isContextOverflow(msg) {
+			return nil, &ContextOverflowError{Message: fmt.Sprintf("%s HTTP %d: %s", label, resp.StatusCode, msg)}
+		}
+		return nil, fmt.Errorf("%s HTTP %d: %s", label, resp.StatusCode, msg)
 	}
 	ch := make(chan StreamEvent, 8)
 	go func() {
@@ -141,3 +154,21 @@ func streamRequest(client *http.Client, req *http.Request, label string, parseFn
 	}()
 	return ch, nil
 }
+
+// isContextOverflow returns true when a 400 response body indicates the request
+// exceeded the model's context window.
+func isContextOverflow(body string) bool {
+	markers := []string{
+		"context_length_exceeded", // OpenAI/OpenRouter error code
+		"prompt is too long",      // Anthropic
+		"Please reduce the length", // OpenAI prose
+		"too many tokens",
+	}
+	lower := strings.ToLower(body)
+	for _, m := range markers {
+		if strings.Contains(lower, strings.ToLower(m)) {
+			return true
+		}
+	}
+	return false
+}