diff --git a/docs/contracts.rst b/docs/contracts.rst
index d3a89c1e2..a22a35447 100644
--- a/docs/contracts.rst
+++ b/docs/contracts.rst
@@ -447,6 +447,12 @@ In particular, the following operations will consume more gas than the stipend p
 
 Please ensure you test your fallback function thoroughly to ensure the execution cost is less than 2300 gas before deploying a contract.
 
+.. warning::
+    Contracts that receive Ether but do not define a fallback function
+    throw an exception, sending back the Ether (this was different
+    before Solidity v0.4.0). So if you want your contract to receive Ether,
+    you have to implement a fallback function.
+
 ::
 
     contract Test {
diff --git a/docs/security-considerations.rst b/docs/security-considerations.rst
index f8d099e4a..7e846674c 100644
--- a/docs/security-considerations.rst
+++ b/docs/security-considerations.rst
@@ -103,7 +103,9 @@ and stall those. Please be explicit about such cases in the documentation of you
 Sending and Receiving Ether
 ===========================
 
-- If a contract receives Ether (without a function being called), the fallback function is executed. The contract can only rely
+- If a contract receives Ether (without a function being called), the fallback function is executed.
+  If it does not have a fallback function, the Ether will be rejected (by throwing an exception).
+  During the execution of the fallback function, the contract can only rely
   on the "gas stipend" (2300 gas) being available to it at that time. This stipend is not enough to access storage in any way.
   To be sure that your contract can receive Ether in that way, check the gas requirements of the fallback function
   (for example in the "details" section in browser-solidity).
diff --git a/libsolidity/analysis/TypeChecker.cpp b/libsolidity/analysis/TypeChecker.cpp
index 235fcabd0..bc03da01f 100644
--- a/libsolidity/analysis/TypeChecker.cpp
+++ b/libsolidity/analysis/TypeChecker.cpp
@@ -92,6 +92,8 @@ bool TypeChecker::visit(ContractDefinition const& _contract)
 			else
 			{
 				fallbackFunction = function;
+				if (_contract.isLibrary())
+					typeError(fallbackFunction->location(), "Libraries cannot have fallback functions.");
 				if (!fallbackFunction->parameters().empty())
 					typeError(fallbackFunction->parameterList().location(), "Fallback function cannot take parameters.");
 				if (!fallbackFunction->returnParameters().empty())
diff --git a/libsolidity/codegen/ContractCompiler.cpp b/libsolidity/codegen/ContractCompiler.cpp
index 715852be8..9d77ccdca 100644
--- a/libsolidity/codegen/ContractCompiler.cpp
+++ b/libsolidity/codegen/ContractCompiler.cpp
@@ -247,11 +247,8 @@ void ContractCompiler::appendFunctionSelector(ContractDefinition const& _contrac
 		m_context << returnTag;
 		appendReturnValuePacker(FunctionType(*fallback).returnParameterTypes(), _contract.isLibrary());
 	}
-	else if (_contract.isLibrary())
-		// Reject invalid library calls and ether sent to a library.
-		m_context.appendJumpTo(m_context.errorTag());
 	else
-		m_context << Instruction::STOP; // function not found
+		m_context.appendJumpTo(m_context.errorTag());
 
 	for (auto const& it: interfaceFunctions)
 	{
diff --git a/test/libsolidity/Assembly.cpp b/test/libsolidity/Assembly.cpp
index 557d496a1..81332f4fb 100644
--- a/test/libsolidity/Assembly.cpp
+++ b/test/libsolidity/Assembly.cpp
@@ -114,7 +114,7 @@ BOOST_AUTO_TEST_CASE(location_test)
 	shared_ptr<string const> n = make_shared<string>("source");
 	AssemblyItems items = compileContract(sourceCode);
 	vector<SourceLocation> locations =
-		vector<SourceLocation>(17, SourceLocation(2, 75, n)) +
+		vector<SourceLocation>(18, SourceLocation(2, 75, n)) +
 		vector<SourceLocation>(28, SourceLocation(20, 72, n)) +
 		vector<SourceLocation>{SourceLocation(42, 51, n), SourceLocation(65, 67, n)} +
 		vector<SourceLocation>(4, SourceLocation(58, 67, n)) +
diff --git a/test/libsolidity/SolidityEndToEndTest.cpp b/test/libsolidity/SolidityEndToEndTest.cpp
index 8a61907ac..a370aafa2 100644
--- a/test/libsolidity/SolidityEndToEndTest.cpp
+++ b/test/libsolidity/SolidityEndToEndTest.cpp
@@ -2053,6 +2053,7 @@ BOOST_AUTO_TEST_CASE(contracts_as_addresses)
 {
 	char const* sourceCode = R"(
 		contract helper {
+			function() { } // can receive ether
 		}
 		contract test {
 			helper h;
@@ -2540,6 +2541,19 @@ BOOST_AUTO_TEST_CASE(inherited_fallback_function)
 	BOOST_CHECK(callContractFunction("getData()") == encodeArgs(1));
 }
 
+BOOST_AUTO_TEST_CASE(default_fallback_throws)
+{
+	char const* sourceCode = R"(
+		contract A {
+			function f() returns (bool) {
+				return this.call();
+			}
+		}
+	)";
+	compileAndRun(sourceCode);
+	BOOST_CHECK(callContractFunction("f()") == encodeArgs(0));
+}
+
 BOOST_AUTO_TEST_CASE(event)
 {
 	char const* sourceCode = R"(
@@ -5943,6 +5957,7 @@ BOOST_AUTO_TEST_CASE(reject_ether_sent_to_library)
 			function f(address x) returns (bool) {
 				return x.send(1);
 			}
+			function () {}
 		}
 	)";
 	compileAndRun(sourceCode, 0, "lib");
diff --git a/test/libsolidity/SolidityNameAndTypeResolution.cpp b/test/libsolidity/SolidityNameAndTypeResolution.cpp
index f0ab07c51..fdd8d7f48 100644
--- a/test/libsolidity/SolidityNameAndTypeResolution.cpp
+++ b/test/libsolidity/SolidityNameAndTypeResolution.cpp
@@ -1102,6 +1102,16 @@ BOOST_AUTO_TEST_CASE(fallback_function_with_arguments)
 	BOOST_CHECK(expectError(text) == Error::Type::TypeError);
 }
 
+BOOST_AUTO_TEST_CASE(fallback_function_in_library)
+{
+	char const* text = R"(
+		library C {
+			function() {}
+		}
+	)";
+	BOOST_CHECK(expectError(text) == Error::Type::TypeError);
+}
+
 BOOST_AUTO_TEST_CASE(fallback_function_with_return_parameters)
 {
 	char const* text = R"(