When implementing your lookup_order MCP tool, the backend sometimes returns errors—for example, “Order not found”...

Option A follows the MCP error contract. An error originating during execution of a valid tool call—such as an API failure, input-validation problem, or business-logic failure—should be returned inside the tool result with isError: true. The content should explain what happened and, where possible, provide actionable recovery guidance.

The official MCP tools specification distinguishes tool-execution errors from protocol-level errors and specifies that execution failures are reported through tool results using isError: true. Anthropic’s tool-using agent tutorial provides the equivalent Claude API pattern using is_error: true, allowing Claude to retry with corrected input, request clarification, or explain the limitation.

Option B falsely represents a failed operation as successful, weakening reliable failure detection. Option C deprives the agent of the information required to determine an appropriate recovery action. Option D may be converted into a tool error by some SDK runners, but uncaught exceptions are not the MCP-level response contract. The strongest implementation returns a concise, sanitized, actionable error result and separately records detailed diagnostics in server logs.