diff --git a/src/aeso_ast_infer_types.erl b/src/aeso_ast_infer_types.erl
index 5a07a9f..5e58a45 100644
--- a/src/aeso_ast_infer_types.erl
+++ b/src/aeso_ast_infer_types.erl
@@ -1327,7 +1327,7 @@ infer_block(Env, _, [E], BlockType) ->
     [check_expr(Env, E, BlockType)];
 infer_block(Env, Attrs, [Def={letfun, Ann, _, _, _, _}|Rest], BlockType) ->
     {{Name, TypeSig}, LetFun} = infer_letfun(Env, Def),
-    FunT = freshen_type(Ann, typesig_to_fun_t(TypeSig)),
+    FunT = typesig_to_fun_t(TypeSig),
     NewE = bind_var({id, Ann, Name}, FunT, Env),
     [LetFun|infer_block(NewE, Attrs, Rest, BlockType)];
 infer_block(Env, _, [{letval, Attrs, Pattern, Type, E}|Rest], BlockType) ->
diff --git a/test/contracts/local_poly_fail.aes b/test/contracts/local_poly_fail.aes
new file mode 100644
index 0000000..189ab23
--- /dev/null
+++ b/test/contracts/local_poly_fail.aes
@@ -0,0 +1,7 @@
+
+contract Fail =
+
+  entrypoint tttt() : bool * int =
+    let f(x : 'a) : 'a = x
+    (f(true), f(1))
+