diff --git a/accounts/abi/bind/backends/simulated.go b/accounts/abi/bind/backends/simulated.go
index e1d5745ca..09288d401 100644
--- a/accounts/abi/bind/backends/simulated.go
+++ b/accounts/abi/bind/backends/simulated.go
@@ -41,6 +41,7 @@ import (
 var _ bind.ContractBackend = (*SimulatedBackend)(nil)
 
 var errBlockNumberUnsupported = errors.New("SimulatedBackend cannot access blocks other than the latest block")
+var errGasEstimationFailed = errors.New("gas required exceeds allowance or always failing transaction")
 
 // SimulatedBackend implements bind.ContractBackend, simulating a blockchain in
 // the background. Its main purpose is to allow easily testing contract bindings.
@@ -203,32 +204,46 @@ func (b *SimulatedBackend) EstimateGas(ctx context.Context, call ethereum.CallMs
 	b.mu.Lock()
 	defer b.mu.Unlock()
 
-	// Binary search the gas requirement, as it may be higher than the amount used
+	// Determine the lowest and highest possible gas limits to binary search in between
 	var (
-		lo uint64 = params.TxGas - 1
-		hi uint64
+		lo  uint64 = params.TxGas - 1
+		hi  uint64
+		cap uint64
 	)
 	if call.Gas != nil && call.Gas.Uint64() >= params.TxGas {
 		hi = call.Gas.Uint64()
 	} else {
 		hi = b.pendingBlock.GasLimit().Uint64()
 	}
-	for lo+1 < hi {
-		// Take a guess at the gas, and check transaction validity
-		mid := (hi + lo) / 2
-		call.Gas = new(big.Int).SetUint64(mid)
+	cap = hi
+
+	// Create a helper to check if a gas allowance results in an executable transaction
+	executable := func(gas uint64) bool {
+		call.Gas = new(big.Int).SetUint64(gas)
 
 		snapshot := b.pendingState.Snapshot()
 		_, _, failed, err := b.callContract(ctx, call, b.pendingBlock, b.pendingState)
 		b.pendingState.RevertToSnapshot(snapshot)
 
-		// If the transaction became invalid or execution failed, raise the gas limit
 		if err != nil || failed {
-			lo = mid
-			continue
+			return false
+		}
+		return true
+	}
+	// Execute the binary search and hone in on an executable gas limit
+	for lo+1 < hi {
+		mid := (hi + lo) / 2
+		if !executable(mid) {
+			lo = mid
+		} else {
+			hi = mid
+		}
+	}
+	// Reject the transaction as invalid if it still fails at the highest allowance
+	if hi == cap {
+		if !executable(hi) {
+			return nil, errGasEstimationFailed
 		}
-		// Otherwise assume the transaction succeeded, lower the gas limit
-		hi = mid
 	}
 	return new(big.Int).SetUint64(hi), nil
 }
diff --git a/internal/ethapi/api.go b/internal/ethapi/api.go
index 1ffb5a180..59a29d722 100644
--- a/internal/ethapi/api.go
+++ b/internal/ethapi/api.go
@@ -649,12 +649,14 @@ func (s *PublicBlockChainAPI) Call(ctx context.Context, args CallArgs, blockNr r
 	return (hexutil.Bytes)(result), err
 }
 
-// EstimateGas returns an estimate of the amount of gas needed to execute the given transaction.
+// EstimateGas returns an estimate of the amount of gas needed to execute the
+// given transaction against the current pending block.
 func (s *PublicBlockChainAPI) EstimateGas(ctx context.Context, args CallArgs) (*hexutil.Big, error) {
-	// Binary search the gas requirement, as it may be higher than the amount used
+	// Determine the lowest and highest possible gas limits to binary search in between
 	var (
-		lo uint64 = params.TxGas - 1
-		hi uint64
+		lo  uint64 = params.TxGas - 1
+		hi  uint64
+		cap uint64
 	)
 	if (*big.Int)(&args.Gas).Uint64() >= params.TxGas {
 		hi = (*big.Int)(&args.Gas).Uint64()
@@ -666,20 +668,31 @@ func (s *PublicBlockChainAPI) EstimateGas(ctx context.Context, args CallArgs) (*
 		}
 		hi = block.GasLimit().Uint64()
 	}
-	for lo+1 < hi {
-		// Take a guess at the gas, and check transaction validity
-		mid := (hi + lo) / 2
-		(*big.Int)(&args.Gas).SetUint64(mid)
+	cap = hi
 
+	// Create a helper to check if a gas allowance results in an executable transaction
+	executable := func(gas uint64) bool {
+		(*big.Int)(&args.Gas).SetUint64(gas)
 		_, _, failed, err := s.doCall(ctx, args, rpc.PendingBlockNumber, vm.Config{})
-
-		// If the transaction became invalid or execution failed, raise the gas limit
 		if err != nil || failed {
-			lo = mid
-			continue
+			return false
+		}
+		return true
+	}
+	// Execute the binary search and hone in on an executable gas limit
+	for lo+1 < hi {
+		mid := (hi + lo) / 2
+		if !executable(mid) {
+			lo = mid
+		} else {
+			hi = mid
+		}
+	}
+	// Reject the transaction as invalid if it still fails at the highest allowance
+	if hi == cap {
+		if !executable(hi) {
+			return nil, fmt.Errorf("gas required exceeds allowance or always failing transaction")
 		}
-		// Otherwise assume the transaction succeeded, lower the gas limit
-		hi = mid
 	}
 	return (*hexutil.Big)(new(big.Int).SetUint64(hi)), nil
 }