diff --git a/pykwasm/src/pykwasm/call.py b/pykwasm/src/pykwasm/call.py
index b853cc6ac..c9f5cc357 100644
--- a/pykwasm/src/pykwasm/call.py
+++ b/pykwasm/src/pykwasm/call.py
@@ -5,7 +5,7 @@
 from eth_account import Account
 from requests.exceptions import ConnectionError
 from web3 import Web3
-from web3.exceptions import BadFunctionCallOutput, Web3RPCError
+from web3.exceptions import BadFunctionCallOutput, ContractLogicError, Web3RPCError
 from web3.middleware import SignAndSendRawMiddlewareBuilder
 
 ABI_MAP = {
@@ -98,11 +98,13 @@ def run_method(w3, contract, sender, eth, method, params):
         else:
             tx_hash = func.transact({'from': sender.address, 'value': eth})
             result_or_receipt = w3.eth.wait_for_transaction_receipt(tx_hash)
-    except (ConnectionError, BadFunctionCallOutput, Web3RPCError) as e:
+    except (ConnectionError, ContractLogicError, BadFunctionCallOutput, Web3RPCError) as e:
         if isinstance(e, (ConnectionError, ConnectionRefusedError)):
             msg = f'Failed to connect to node: {e.message}'
         elif isinstance(e, BadFunctionCallOutput):
             msg = f'Could not interpret function output: {",".join(e.args)}'
+        elif isinstance(e, ContractLogicError):
+            msg = f'Contract logic error: {e.message}'
         else:
             msg = f'Node RPC encountered an error: {e.message}'
         print(msg, file=sys.stderr)
diff --git a/pykwasm/src/pykwasm/kdist/wasm-semantics/ulm-wasm.md b/pykwasm/src/pykwasm/kdist/wasm-semantics/ulm-wasm.md
index 9582f9cc6..db01a95ab 100644
--- a/pykwasm/src/pykwasm/kdist/wasm-semantics/ulm-wasm.md
+++ b/pykwasm/src/pykwasm/kdist/wasm-semantics/ulm-wasm.md
@@ -337,7 +337,7 @@ These rules define various integration points between the ULM and our Wasm inter
             </ulmWasm>
             ...
         </generatedTop>
-    )  => #if OutVal ==K NO_OUTPUT #then EVMC_INTERNAL_ERROR #else Status #fi
+    )  => #if Status ==Int EVMC_SUCCESS andBool OutVal ==K NO_OUTPUT #then EVMC_INTERNAL_ERROR #else Status #fi
 ```
 
 Hooks implementation
@@ -629,7 +629,7 @@ Handle the actual hook calls.
 
     rule
         <instrs>
-            #fail(ulmBytes(BYTES:Bytes)) => #throwException(EVMC_FAILURE, Bytes2String(BYTES))
+            #fail(ulmBytes(BYTES:Bytes)) => #throwException(EVMC_REVERT, Bytes2String(BYTES))
             ...
         </instrs>
 
diff --git a/tests/ulm/erc20/erc20_negative_test.sh b/tests/ulm/erc20/erc20_negative_test.sh
new file mode 100755
index 000000000..9d04ead9b
--- /dev/null
+++ b/tests/ulm/erc20/erc20_negative_test.sh
@@ -0,0 +1,473 @@
+#!/bin/bash
+
+set -e
+
+SCRIPT_DIR=$( cd -- "$( dirname -- "${BASH_SOURCE[0]}" )" &> /dev/null && pwd )
+ROOT_DIR="$SCRIPT_DIR/../../.."
+
+# change to root directory
+cd "$ROOT_DIR"
+
+# re-execute script with poetry to get poetry script aliases
+if [ -z ${IN_POETRY_SHELL:+x} ]; then
+  export IN_POETRY_SHELL=1
+  exec poetry -C pykwasm run bash "$SCRIPT_DIR/$(basename -- $0)"
+fi
+
+
+RED='\033[0;31m'
+NC='\033[0m'
+GREEN="\033[0;32m"
+BLUE="\033[0;34m"
+WHITE="\033[0;00m"
+
+function assert_eq {
+  if [ ! "$1" == "$2" ]; then
+    >&2 echo -e "${RED}$3${NC}: Expected $1 to be equal to $2"
+    exit 1
+  fi
+}
+
+function to_hex {
+  printf "0x%x" $1
+}
+
+function erc20_deploy {
+  local key=$1
+  deploy build/erc20/erc20.bin http://localhost:8545 /dev/stdin <<< $key
+}
+
+function erc20_decimals {
+  local key=$1
+  local contract=$2
+  call http://localhost:8545 erc20 $contract /dev/stdin 0 decimals <<< $key
+}
+
+function erc20_totalSupply {
+  local key=$1
+  local contract=$2
+  call http://localhost:8545 erc20 $contract /dev/stdin 0 totalSupply <<< $key
+}
+
+function erc20_balanceOf {
+  local key=$1
+  local contract=$2
+  local account=$3
+  call http://localhost:8545 erc20 $contract /dev/stdin 0 balanceOf $account <<< $key
+}
+
+function erc20_allowance {
+  local key=$1
+  local contract=$2
+  local from_account=$3
+  local allowed_account=$4
+  call http://localhost:8545 erc20 $contract /dev/stdin 0 allowance $from_account $allowed_account <<< $key
+}
+
+function erc20_mint {
+  local key=$1
+  local contract=$2
+  local account=$3
+  local amount=$4
+  call http://localhost:8545 erc20 $contract /dev/stdin 0 mint $account $amount <<< $key
+}
+
+function erc20_transfer {
+  local key=$1
+  local contract=$2
+  local account=$3
+  local amount=$4
+  call http://localhost:8545 erc20 $contract /dev/stdin 0 transfer $account $amount <<< $key
+}
+
+function erc20_approve {
+  local key=$1
+  local contract=$2
+  local account=$3
+  local amount=$4
+  call http://localhost:8545 erc20 $contract /dev/stdin 0 approve $account $amount <<< $key
+}
+
+function erc20_transfer_from {
+  local key=$1
+  local contract=$2
+  local from_account=$3
+  local to_account=$4
+  local amount=$5
+  call http://localhost:8545 erc20 $contract /dev/stdin 0 transferFrom $from_account $to_account $amount <<< $key
+}
+
+function test_transfer_too_much {
+  echo -n "Transfer test "
+
+  # generate some accounts
+  account1=($(mkacct))
+  a1=${account1[0]}
+  k1=${account1[1]}
+  echo -n "."
+
+  account2=($(mkacct))
+  a2=${account2[0]}
+  k2=${account2[1]}
+  echo -n "."
+
+  account3=($(mkacct))
+  a3=${account3[0]}
+  k3=${account3[1]}
+  echo -n "."
+
+  # fund accounts
+  fund /dev/stdin <<< $k1
+  echo -n "."
+  fund /dev/stdin <<< $k2
+  echo -n "."
+  fund /dev/stdin <<< $k3
+  echo -n "."
+
+  # deploy contract
+  contract=$(erc20_deploy $k1)
+  echo -n "."
+
+  balance2=$(erc20_balanceOf $k1 $contract $a2)
+  echo -n "."
+  assert_eq "0" "$balance2" "Balance of Account 2"
+
+  balance3=$(erc20_balanceOf $k1 $contract $a3)
+  echo -n "."
+  assert_eq "0" "$balance3" "Balance of Account 3"
+
+  # check total supply
+  supply=$(erc20_totalSupply $k1 $contract)
+  echo -n "."
+  assert_eq "0" "$supply" "Total Supply"
+
+  erc20_mint $k1 $contract $a2 $(to_hex 1000)
+  echo -n "."
+
+  balance2=$(erc20_balanceOf $k1 $contract $a2)
+  echo -n "."
+  assert_eq "1000" "$balance2" "Balance of Account 2"
+
+  balance3=$(erc20_balanceOf $k1 $contract $a3)
+  echo -n "."
+  assert_eq "0" "$balance3" "Balance of Account 3"
+
+  # check total supply
+  supply=$(erc20_totalSupply $k1 $contract)
+  echo -n "."
+  assert_eq "1000" "$supply" "Total Supply"
+
+  erc20_transfer $k2 $contract $a3 $(to_hex 600)
+  echo -n "."
+
+  balance2=$(erc20_balanceOf $k1 $contract $a2)
+  echo -n "."
+  assert_eq "400" "$balance2" "Balance of Account 2"
+
+  balance3=$(erc20_balanceOf $k1 $contract $a3)
+  echo -n "."
+  assert_eq "600" "$balance3" "Balance of Account 3"
+
+  # check total supply
+  supply=$(erc20_totalSupply $k1 $contract)
+  echo -n "."
+  assert_eq "1000" "$supply" "Total Supply"
+
+  echo -e -n "\nTransfer too much test (should fail): "
+  (! erc20_transfer $k2 $contract $a3 $(to_hex 600))  # this should fail
+
+  echo -n "Transfer test (continue): "
+  balance2=$(erc20_balanceOf $k1 $contract $a2)
+  echo -n "."
+  assert_eq "400" "$balance2" "Balance of Account 2"
+
+  balance3=$(erc20_balanceOf $k1 $contract $a3)
+  echo -n "."
+  assert_eq "600" "$balance3" "Balance of Account 3"
+
+  # check total supply
+  supply=$(erc20_totalSupply $k1 $contract)
+  echo -n "."
+  assert_eq "1000" "$supply" "Total Supply"
+
+
+  echo -e " ${GREEN}passed${NC}"
+}
+
+function test_transfer_too_much_from {
+  echo -n "Transfer from test "
+
+  # generate some accounts
+  account1=($(mkacct))
+  a1=${account1[0]}
+  k1=${account1[1]}
+  echo -n "."
+
+  account2=($(mkacct))
+  a2=${account2[0]}
+  k2=${account2[1]}
+  echo -n "."
+
+  account3=($(mkacct))
+  a3=${account3[0]}
+  k3=${account3[1]}
+  echo -n "."
+
+  account4=($(mkacct))
+  a4=${account4[0]}
+  k4=${account4[1]}
+  echo -n "."
+
+  # fund accounts
+  fund /dev/stdin <<< $k1
+  echo -n "."
+  fund /dev/stdin <<< $k2
+  echo -n "."
+  fund /dev/stdin <<< $k3
+  echo -n "."
+  fund /dev/stdin <<< $k4
+  echo -n "."
+
+  # deploy contract
+  contract=$(erc20_deploy $k1)
+  echo -n "."
+
+  # ***** Check initial state
+
+  balance=$(erc20_balanceOf $k1 $contract $a2)
+  echo -n "."
+  assert_eq "0" "$balance" "Balance of Account 2"
+
+  balance=$(erc20_balanceOf $k1 $contract $a3)
+  echo -n "."
+  assert_eq "0" "$balance" "Balance of Account 3"
+
+  balance=$(erc20_balanceOf $k1 $contract $a4)
+  echo -n "."
+  assert_eq "0" "$balance" "Balance of Account 4"
+
+  supply=$(erc20_totalSupply $k1 $contract)
+  echo -n "."
+  assert_eq "0" "$supply" "Total Supply"
+
+  allowance=$(erc20_allowance $k1 $contract $a2 $a3)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 2 to Account 3"
+
+  allowance=$(erc20_allowance $k1 $contract $a2 $a4)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 2 to Account 4"
+
+  allowance=$(erc20_allowance $k1 $contract $a3 $a2)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 3 to Account 2"
+
+  allowance=$(erc20_allowance $k1 $contract $a3 $a4)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 3 to Account 4"
+
+  allowance=$(erc20_allowance $k1 $contract $a4 $a2)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 4 to Account 2"
+
+  allowance=$(erc20_allowance $k1 $contract $a4 $a3)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 4 to Account 3"
+
+  # ***** Mint tokens
+
+  erc20_mint $k1 $contract $a2 $(to_hex 1000)
+  echo -n "."
+
+  # ***** Check state after mint
+
+  balance=$(erc20_balanceOf $k1 $contract $a2)
+  echo -n "."
+  assert_eq "1000" "$balance" "Balance of Account 2"
+
+  balance=$(erc20_balanceOf $k1 $contract $a3)
+  echo -n "."
+  assert_eq "0" "$balance" "Balance of Account 3"
+
+  balance=$(erc20_balanceOf $k1 $contract $a4)
+  echo -n "."
+  assert_eq "0" "$balance" "Balance of Account 4"
+
+  supply=$(erc20_totalSupply $k1 $contract)
+  echo -n "."
+  assert_eq "1000" "$supply" "Total Supply"
+
+  allowance=$(erc20_allowance $k1 $contract $a2 $a3)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 2 to Account 3"
+
+  allowance=$(erc20_allowance $k1 $contract $a2 $a4)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 2 to Account 4"
+
+  allowance=$(erc20_allowance $k1 $contract $a3 $a2)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 3 to Account 2"
+
+  allowance=$(erc20_allowance $k1 $contract $a3 $a4)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 3 to Account 4"
+
+  allowance=$(erc20_allowance $k1 $contract $a4 $a2)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 4 to Account 2"
+
+  allowance=$(erc20_allowance $k1 $contract $a4 $a3)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 4 to Account 3"
+
+  # ***** Account 2 approves Account 3 to transfer 300 tokens
+
+  erc20_approve $k2 $contract $a3 $(to_hex 300)
+  echo -n "."
+
+  # ***** Check state after approve
+
+  balance=$(erc20_balanceOf $k1 $contract $a2)
+  echo -n "."
+  assert_eq "1000" "$balance" "Balance of Account 2"
+
+  balance=$(erc20_balanceOf $k1 $contract $a3)
+  echo -n "."
+  assert_eq "0" "$balance" "Balance of Account 3"
+
+  balance=$(erc20_balanceOf $k1 $contract $a4)
+  echo -n "."
+  assert_eq "0" "$balance" "Balance of Account 4"
+
+  supply=$(erc20_totalSupply $k1 $contract)
+  echo -n "."
+  assert_eq "1000" "$supply" "Total Supply"
+
+  allowance=$(erc20_allowance $k1 $contract $a2 $a3)
+  echo -n "."
+  assert_eq "300" "$allowance" "Allowance from Account 2 to Account 3"
+
+  allowance=$(erc20_allowance $k1 $contract $a2 $a4)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 2 to Account 4"
+
+  allowance=$(erc20_allowance $k1 $contract $a3 $a2)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 3 to Account 2"
+
+  allowance=$(erc20_allowance $k1 $contract $a3 $a4)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 3 to Account 4"
+
+  allowance=$(erc20_allowance $k1 $contract $a4 $a2)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 4 to Account 2"
+
+  allowance=$(erc20_allowance $k1 $contract $a4 $a3)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 4 to Account 3"
+
+  # ***** Account 3 transfers 200 tokens from Account 2 to Account 4
+
+  erc20_transfer_from $k3 $contract $a2 $a4 $(to_hex 200)
+  echo -n "."
+
+  # ***** Check state after transfer
+
+  balance=$(erc20_balanceOf $k1 $contract $a2)
+  echo -n "."
+  assert_eq "800" "$balance" "Balance of Account 2"
+
+  balance=$(erc20_balanceOf $k1 $contract $a3)
+  echo -n "."
+  assert_eq "0" "$balance" "Balance of Account 3"
+
+  balance=$(erc20_balanceOf $k1 $contract $a4)
+  echo -n "."
+  assert_eq "200" "$balance" "Balance of Account 4"
+
+  supply=$(erc20_totalSupply $k1 $contract)
+  echo -n "."
+  assert_eq "1000" "$supply" "Total Supply"
+
+  allowance=$(erc20_allowance $k1 $contract $a2 $a3)
+  echo -n "."
+  assert_eq "100" "$allowance" "Allowance from Account 2 to Account 3"
+
+  allowance=$(erc20_allowance $k1 $contract $a2 $a4)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 2 to Account 4"
+
+  allowance=$(erc20_allowance $k1 $contract $a3 $a2)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 3 to Account 2"
+
+  allowance=$(erc20_allowance $k1 $contract $a3 $a4)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 3 to Account 4"
+
+  allowance=$(erc20_allowance $k1 $contract $a4 $a2)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 4 to Account 2"
+
+  allowance=$(erc20_allowance $k1 $contract $a4 $a3)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 4 to Account 3"
+
+  # ***** Account 3 transfers 100 tokens from Account 2 to Account 3
+
+  echo -e -n "\nTransfer more than allowance test (should fail): "
+  (! erc20_transfer_from $k3 $contract $a2 $a3 $(to_hex 200))  # this should fail
+
+  # ***** Check state after transfer
+
+  echo -n "Transfer test (continue): "
+  balance=$(erc20_balanceOf $k1 $contract $a2)
+  echo -n "."
+  assert_eq "800" "$balance" "Balance of Account 2"
+
+  balance=$(erc20_balanceOf $k1 $contract $a3)
+  echo -n "."
+  assert_eq "0" "$balance" "Balance of Account 3"
+
+  balance=$(erc20_balanceOf $k1 $contract $a4)
+  echo -n "."
+  assert_eq "200" "$balance" "Balance of Account 4"
+
+  supply=$(erc20_totalSupply $k1 $contract)
+  echo -n "."
+  assert_eq "1000" "$supply" "Total Supply"
+
+  allowance=$(erc20_allowance $k1 $contract $a2 $a3)
+  echo -n "."
+  assert_eq "100" "$allowance" "Allowance from Account 2 to Account 3"
+
+  allowance=$(erc20_allowance $k1 $contract $a2 $a4)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 2 to Account 4"
+
+  allowance=$(erc20_allowance $k1 $contract $a3 $a2)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 3 to Account 2"
+
+  allowance=$(erc20_allowance $k1 $contract $a3 $a4)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 3 to Account 4"
+
+  allowance=$(erc20_allowance $k1 $contract $a4 $a2)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 4 to Account 2"
+
+  allowance=$(erc20_allowance $k1 $contract $a4 $a3)
+  echo -n "."
+  assert_eq "0" "$allowance" "Allowance from Account 4 to Account 3"
+
+  echo -e " ${GREEN}passed${NC}"
+}
+
+
+test_transfer_too_much
+test_transfer_too_much_from
+
+echo -e "${GREEN}All tests passed${NC}"