diff --git a/autogpt_platform/frontend/src/app/(platform)/build/components/BuilderChatPanel/__tests__/BuilderChatPanel.test.tsx b/autogpt_platform/frontend/src/app/(platform)/build/components/BuilderChatPanel/__tests__/BuilderChatPanel.test.tsx
index 8ff705ef56..aee47e7122 100644
--- a/autogpt_platform/frontend/src/app/(platform)/build/components/BuilderChatPanel/__tests__/BuilderChatPanel.test.tsx
+++ b/autogpt_platform/frontend/src/app/(platform)/build/components/BuilderChatPanel/__tests__/BuilderChatPanel.test.tsx
@@ -214,6 +214,14 @@ describe("BuilderChatPanel", () => {
     expect(screen.getByText(/Connection error/i)).toBeDefined();
   });
 
+  it("shows session error message when sessionError is true", () => {
+    mockUseBuilderChatPanel.mockReturnValue(
+      makeMockHook({ isOpen: true, sessionError: true }),
+    );
+    render(<BuilderChatPanel />);
+    expect(screen.getByText(/Failed to start chat session/i)).toBeDefined();
+  });
+
   it("renders the panel with role=dialog and message list with role=log", () => {
     mockUseBuilderChatPanel.mockReturnValue(makeMockHook({ isOpen: true }));
     render(<BuilderChatPanel />);
diff --git a/autogpt_platform/frontend/src/app/(platform)/build/components/BuilderChatPanel/__tests__/useBuilderChatPanel.test.ts b/autogpt_platform/frontend/src/app/(platform)/build/components/BuilderChatPanel/__tests__/useBuilderChatPanel.test.ts
new file mode 100644
index 0000000000..594d2c886a
--- /dev/null
+++ b/autogpt_platform/frontend/src/app/(platform)/build/components/BuilderChatPanel/__tests__/useBuilderChatPanel.test.ts
@@ -0,0 +1,210 @@
+import { describe, expect, it, vi, beforeEach, afterEach } from "vitest";
+import { renderHook, act, cleanup } from "@testing-library/react";
+
+// --- Module mocks (must be hoisted before imports) ---
+
+// Bypass useShallow's ref-based shallow comparison so selectors work in tests.
+vi.mock("zustand/react/shallow", () => ({
+  useShallow: (fn: (s: unknown) => unknown) => fn,
+}));
+
+const mockNodes: unknown[] = [];
+const mockEdges: unknown[] = [];
+const mockUpdateNodeData = vi.fn();
+const mockAddEdge = vi.fn();
+
+vi.mock("../../../stores/nodeStore", () => ({
+  useNodeStore: (selector: (s: unknown) => unknown) =>
+    selector({
+      nodes: mockNodes,
+      updateNodeData: mockUpdateNodeData,
+    }),
+}));
+
+vi.mock("../../../stores/edgeStore", () => ({
+  useEdgeStore: (selector: (s: unknown) => unknown) =>
+    selector({
+      edges: mockEdges,
+      addEdge: mockAddEdge,
+    }),
+}));
+
+const mockPostV2CreateSession = vi.fn();
+vi.mock("@/app/api/__generated__/endpoints/chat/chat", () => ({
+  postV2CreateSession: (...args: unknown[]) => mockPostV2CreateSession(...args),
+}));
+
+vi.mock("@/app/api/__generated__/endpoints/graphs/graphs", () => ({
+  getGetV1GetSpecificGraphQueryKey: (id: string) => ["graphs", id],
+}));
+
+vi.mock("@/lib/supabase/actions", () => ({
+  getWebSocketToken: vi.fn().mockResolvedValue({ token: "tok", error: null }),
+}));
+
+vi.mock("@/services/environment", () => ({
+  environment: { getAGPTServerBaseUrl: () => "http://localhost:8000" },
+}));
+
+const mockInvalidateQueries = vi.fn();
+vi.mock("@tanstack/react-query", () => ({
+  useQueryClient: () => ({ invalidateQueries: mockInvalidateQueries }),
+}));
+
+const mockSendMessage = vi.fn();
+const mockStop = vi.fn();
+vi.mock("@ai-sdk/react", () => ({
+  useChat: () => ({
+    messages: [],
+    sendMessage: mockSendMessage,
+    stop: mockStop,
+    status: "ready",
+    error: undefined,
+  }),
+}));
+
+vi.mock("ai", () => ({
+  DefaultChatTransport: vi.fn().mockImplementation(() => ({})),
+}));
+
+vi.mock("nuqs", () => ({
+  parseAsString: { withDefault: (d: string) => d },
+  useQueryStates: () => [{ flowID: null }, vi.fn()],
+}));
+
+// Import after mocks
+import { useBuilderChatPanel } from "../useBuilderChatPanel";
+
+beforeEach(() => {
+  mockNodes.length = 0;
+  mockEdges.length = 0;
+  mockUpdateNodeData.mockClear();
+  mockAddEdge.mockClear();
+  mockPostV2CreateSession.mockClear();
+  mockInvalidateQueries.mockClear();
+  mockSendMessage.mockClear();
+});
+
+afterEach(() => {
+  cleanup();
+});
+
+describe("useBuilderChatPanel – handleApplyAction", () => {
+  it("update_node_input: calls updateNodeData with merged hardcodedValues", () => {
+    mockNodes.push({
+      id: "node-1",
+      data: { hardcodedValues: { existing: "value" } },
+    });
+    const { result } = renderHook(() => useBuilderChatPanel());
+
+    act(() => {
+      result.current.handleApplyAction({
+        type: "update_node_input",
+        nodeId: "node-1",
+        key: "query",
+        value: "AI news",
+      });
+    });
+
+    expect(mockUpdateNodeData).toHaveBeenCalledWith("node-1", {
+      hardcodedValues: { existing: "value", query: "AI news" },
+    });
+  });
+
+  it("update_node_input: does nothing when node not found", () => {
+    const { result } = renderHook(() => useBuilderChatPanel());
+
+    act(() => {
+      result.current.handleApplyAction({
+        type: "update_node_input",
+        nodeId: "nonexistent",
+        key: "query",
+        value: "test",
+      });
+    });
+
+    expect(mockUpdateNodeData).not.toHaveBeenCalled();
+  });
+
+  it("connect_nodes: calls addEdge when both nodes exist", () => {
+    mockNodes.push({ id: "src" }, { id: "tgt" });
+    const { result } = renderHook(() => useBuilderChatPanel());
+
+    act(() => {
+      result.current.handleApplyAction({
+        type: "connect_nodes",
+        source: "src",
+        target: "tgt",
+        sourceHandle: "output",
+        targetHandle: "input",
+      });
+    });
+
+    expect(mockAddEdge).toHaveBeenCalledWith({
+      id: "src:output->tgt:input",
+      source: "src",
+      target: "tgt",
+      sourceHandle: "output",
+      targetHandle: "input",
+      type: "custom",
+    });
+  });
+
+  it("connect_nodes: does NOT call addEdge when source node is missing", () => {
+    mockNodes.push({ id: "tgt" });
+    const { result } = renderHook(() => useBuilderChatPanel());
+
+    act(() => {
+      result.current.handleApplyAction({
+        type: "connect_nodes",
+        source: "missing-src",
+        target: "tgt",
+        sourceHandle: "output",
+        targetHandle: "input",
+      });
+    });
+
+    expect(mockAddEdge).not.toHaveBeenCalled();
+  });
+
+  it("connect_nodes: does NOT call addEdge when target node is missing", () => {
+    mockNodes.push({ id: "src" });
+    const { result } = renderHook(() => useBuilderChatPanel());
+
+    act(() => {
+      result.current.handleApplyAction({
+        type: "connect_nodes",
+        source: "src",
+        target: "missing-tgt",
+        sourceHandle: "output",
+        targetHandle: "input",
+      });
+    });
+
+    expect(mockAddEdge).not.toHaveBeenCalled();
+  });
+});
+
+describe("useBuilderChatPanel – initial state", () => {
+  it("starts with panel closed and no session", () => {
+    const { result } = renderHook(() => useBuilderChatPanel());
+    expect(result.current.isOpen).toBe(false);
+    expect(result.current.sessionId).toBeNull();
+    expect(result.current.sessionError).toBe(false);
+    expect(result.current.isCreatingSession).toBe(false);
+  });
+
+  it("handleToggle opens and closes the panel", () => {
+    const { result } = renderHook(() => useBuilderChatPanel());
+
+    act(() => {
+      result.current.handleToggle();
+    });
+    expect(result.current.isOpen).toBe(true);
+
+    act(() => {
+      result.current.handleToggle();
+    });
+    expect(result.current.isOpen).toBe(false);
+  });
+});