The second level of the Empire saga called "The Alliance" (playing on easy) had me speaking to the Mountain Clan as we had formed an Alliance, which they initiated. Naturally, I accepted. Later on they wanted to sell me spells, which I refused as they were overpriced, and I was out of money at the time. This happened twice. Two things:

1) While I was already allied with the Mountain clan, my cleric told me to ally with them? What's up with that?

2) As I said i refused to buy the Mountain clan's spells twice. Later they said "Screw you, the deal is off" and attacked me. I assume if I had bought the spells this would not have happened, and we would still be buddies?

Well, there are battle alliances and there are long-time alliances. The whole mission, if I recall correctly, was about creating an alliance with the dwarven race. Yes, not buying from your allies decreases your diplomatic relations, and leads to war eventually

Thanks for helping