diff --git a/libsolidity/AST.cpp b/libsolidity/AST.cpp
index 25d2ccd84..1b22c44f8 100644
--- a/libsolidity/AST.cpp
+++ b/libsolidity/AST.cpp
@@ -1001,10 +1001,17 @@ void NewExpression::checkTypeRequirements(TypePointers const*)
 {
 	m_contractName->checkTypeRequirements(nullptr);
 	m_contract = dynamic_cast<ContractDefinition const*>(&m_contractName->referencedDeclaration());
+
 	if (!m_contract)
 		BOOST_THROW_EXCEPTION(createTypeError("Identifier is not a contract."));
 	if (!m_contract->isFullyImplemented())
 		BOOST_THROW_EXCEPTION(createTypeError("Trying to create an instance of an abstract contract."));
+
+	auto scopeContract = m_contractName->contractScope();
+	auto bases = m_contract->linearizedBaseContracts();
+	if (find(bases.begin(), bases.end(), scopeContract) != bases.end())
+		BOOST_THROW_EXCEPTION(createTypeError("Circular reference for contract creation: cannot create instance of derived or same contract."));
+
 	shared_ptr<ContractType const> contractType = make_shared<ContractType>(*m_contract);
 	TypePointers const& parameterTypes = contractType->constructorType()->parameterTypes();
 	m_type = make_shared<FunctionType>(
@@ -1137,7 +1144,7 @@ void Identifier::checkTypeRequirements(TypePointers const* _argumentTypes)
 	}
 	solAssert(!!m_referencedDeclaration, "Referenced declaration is null after overload resolution.");
 	m_isLValue = m_referencedDeclaration->isLValue();
-	m_type = m_referencedDeclaration->type(m_currentContract);
+	m_type = m_referencedDeclaration->type(m_contractScope);
 	if (!m_type)
 		BOOST_THROW_EXCEPTION(createTypeError("Declaration referenced before type could be determined."));
 }
diff --git a/libsolidity/AST.h b/libsolidity/AST.h
index 6068e7561..48790e6a2 100644
--- a/libsolidity/AST.h
+++ b/libsolidity/AST.h
@@ -1257,7 +1257,7 @@ public:
 	)
 	{
 		m_referencedDeclaration = &_referencedDeclaration;
-		m_currentContract = _currentContract;
+		m_contractScope = _currentContract;
 	}
 	Declaration const& referencedDeclaration() const;
 
@@ -1273,6 +1273,8 @@ public:
 	/// argument types in a call context.
 	void overloadResolution(TypePointers const& _argumentTypes);
 
+	ContractDefinition const* contractScope() const { return m_contractScope; }
+
 private:
 	ASTPointer<ASTString> m_name;
 
@@ -1280,7 +1282,7 @@ private:
 	Declaration const* m_referencedDeclaration = nullptr;
 	/// Stores a reference to the current contract. This is needed because types of base contracts
 	/// change depending on the context.
-	ContractDefinition const* m_currentContract = nullptr;
+	ContractDefinition const* m_contractScope = nullptr;
 	/// A vector of overloaded declarations, right now only FunctionDefinition has overloaded declarations.
 	std::vector<Declaration const*> m_overloadedDeclarations;
 };
diff --git a/test/libsolidity/SolidityNameAndTypeResolution.cpp b/test/libsolidity/SolidityNameAndTypeResolution.cpp
index 9f352b364..883d78074 100644
--- a/test/libsolidity/SolidityNameAndTypeResolution.cpp
+++ b/test/libsolidity/SolidityNameAndTypeResolution.cpp
@@ -2194,6 +2194,18 @@ BOOST_AUTO_TEST_CASE(string_bytes_conversion)
 	BOOST_CHECK_NO_THROW(parseTextAndResolveNames(text));
 }
 
+
+BOOST_AUTO_TEST_CASE(creating_contract_within_the_contract)
+{
+	char const* sourceCode = R"(
+		contract Test {
+			function f() { var x = new Test(); }
+		}
+	)";
+
+	BOOST_CHECK_THROW(parseTextAndResolveNames(sourceCode), TypeError);
+}
+
 BOOST_AUTO_TEST_SUITE_END()
 
 }