diff --git a/src/bin/grin.rs b/src/bin/grin.rs
index df67be01e..7db582d6e 100644
--- a/src/bin/grin.rs
+++ b/src/bin/grin.rs
@@ -489,6 +489,14 @@ fn wallet_command(wallet_args: &ArgMatches, global_config: GlobalConfig) {
 						amount_to_hr_string(available),
 					);
 				}
+				Err(wallet::Error::FeeExceedsAmount {sender_amount, recipient_fee}) => {
+					error!(
+						LOGGER, 
+						"Recipient rejected the transfer because transaction fee ({}) exceeded amount ({}).",
+						amount_to_hr_string(recipient_fee),
+						amount_to_hr_string(sender_amount)
+					);
+				}
 				Err(e) => {
 					error!(LOGGER, "Tx not sent: {:?}", e);
 				}
diff --git a/wallet/src/receiver.rs b/wallet/src/receiver.rs
index 18a5d5c0b..384fba352 100644
--- a/wallet/src/receiver.rs
+++ b/wallet/src/receiver.rs
@@ -24,7 +24,7 @@ use serde_json;
 
 use api;
 use core::consensus::reward;
-use core::core::{build, Block, Output, Transaction, TxKernel};
+use core::core::{build, Block, Output, Transaction, TxKernel, amount_to_hr_string};
 use core::ser;
 use keychain::{Identifier, Keychain};
 use types::*;
@@ -66,6 +66,19 @@ fn handle_sender_initiation(
 		});
 	}
 
+    if fee > amount {
+		info!(
+			LOGGER, 
+			"Rejected the transfer because transaction fee ({}) exceeds received amount ({}).",
+			amount_to_hr_string(fee),
+			amount_to_hr_string(amount)
+		);
+        return Err(Error::FeeExceedsAmount {
+            sender_amount: amount,
+            recipient_fee: fee,
+        });
+    }
+
 	let out_amount = amount - fee;
 
 	//First step is just to get the excess sum of the outputs we're participating in
@@ -310,6 +323,19 @@ fn build_final_transaction(
 		});
 	}
 
+    if fee > amount {
+		info!(
+			LOGGER, 
+			"Rejected the transfer because transaction fee ({}) exceeds received amount ({}).",
+			amount_to_hr_string(fee),
+			amount_to_hr_string(amount)
+		);
+        return Err(Error::FeeExceedsAmount {
+            sender_amount: amount,
+            recipient_fee: fee,
+        });
+    }
+
 	let out_amount = amount - fee;
 
 	// Get output we created in earlier step
diff --git a/wallet/src/sender.rs b/wallet/src/sender.rs
index 7e683fd4c..6023497d4 100644
--- a/wallet/src/sender.rs
+++ b/wallet/src/sender.rs
@@ -15,7 +15,7 @@
 use api;
 use client;
 use checker;
-use core::core::{build, Transaction};
+use core::core::{build, Transaction, amount_to_hr_string};
 use core::ser;
 use keychain::{BlindingFactor, Identifier, Keychain};
 use receiver::TxWrapper;
@@ -97,7 +97,16 @@ pub fn issue_send_tx(
 	debug!(LOGGER, "Posting partial transaction to {}", url);
 	let res = client::send_partial_tx(&url, &partial_tx);
 	if let Err(e) = res {
-		error!(LOGGER, "Communication with receiver failed on SenderInitiation send. Aborting transaction");
+		match e {
+			Error::FeeExceedsAmount {sender_amount, recipient_fee} => 
+				error!(
+					LOGGER, 
+					"Recipient rejected the transfer because transaction fee ({}) exceeded amount ({}).",
+					amount_to_hr_string(recipient_fee),
+					amount_to_hr_string(sender_amount)
+				),
+			_ => error!(LOGGER, "Communication with receiver failed on SenderInitiation send. Aborting transaction"),
+		}
 		rollback_wallet()?;
 		return Err(e);
 	}
@@ -124,7 +133,16 @@ pub fn issue_send_tx(
 	// And send again
 	let res = client::send_partial_tx(&url, &partial_tx);
 	if let Err(e) = res {
-		error!(LOGGER, "Communication with receiver failed on SenderConfirmation send. Aborting transaction");
+		match e {
+			Error::FeeExceedsAmount {sender_amount, recipient_fee} => 
+				error!(
+					LOGGER, 
+					"Recipient rejected the transfer because transaction fee ({}) exceeded amount ({}).",
+					amount_to_hr_string(recipient_fee),
+					amount_to_hr_string(sender_amount)
+				),
+			_ => error!(LOGGER, "Communication with receiver failed on SenderConfirmation send. Aborting transaction"),
+		}
 		rollback_wallet()?;
 		return Err(e);
 	}
diff --git a/wallet/src/types.rs b/wallet/src/types.rs
index fe5fc4e88..26a95bac1 100644
--- a/wallet/src/types.rs
+++ b/wallet/src/types.rs
@@ -66,6 +66,7 @@ pub fn tx_fee(input_len: usize, output_len: usize, base_fee: Option<u64>) -> u64
 pub enum Error {
 	NotEnoughFunds(u64),
 	FeeDispute { sender_fee: u64, recipient_fee: u64 },
+	FeeExceedsAmount { sender_amount: u64, recipient_fee: u64 },
 	Keychain(keychain::Error),
 	Transaction(transaction::Error),
 	Secp(secp::Error),