diff --git a/test/e2e/tests/contract-interactions.spec.js b/test/e2e/tests/contract-interactions.spec.js
index 1e4ddecfa..e8edd9107 100644
--- a/test/e2e/tests/contract-interactions.spec.js
+++ b/test/e2e/tests/contract-interactions.spec.js
@@ -6,10 +6,6 @@ const {
 } = require('../helpers');
 
 describe('Deploy contract and call contract methods', function () {
-  let windowHandles;
-  let extension;
-  let popup;
-  let dapp;
   const ganacheOptions = {
     accounts: [
       {
@@ -37,13 +33,13 @@ describe('Deploy contract and call contract methods', function () {
         await driver.clickElement({ text: 'Connect', tag: 'button' });
         await driver.waitUntilXWindowHandles(3);
         await driver.delay(5000);
-        windowHandles = await driver.getAllWindowHandles();
-        extension = windowHandles[0];
-        dapp = await driver.switchToWindowWithTitle(
+        let windowHandles = await driver.getAllWindowHandles();
+        const extension = windowHandles[0];
+        const dapp = await driver.switchToWindowWithTitle(
           'E2E Test Dapp',
           windowHandles,
         );
-        popup = windowHandles.find(
+        const popup = windowHandles.find(
           (handle) => handle !== extension && handle !== dapp,
         );
         await driver.switchToWindow(popup);
diff --git a/test/e2e/tests/failing-contract.spec.js b/test/e2e/tests/failing-contract.spec.js
new file mode 100644
index 000000000..f95fba9e4
--- /dev/null
+++ b/test/e2e/tests/failing-contract.spec.js
@@ -0,0 +1,107 @@
+const { strict: assert } = require('assert');
+const { convertToHexValue, withFixtures } = require('../helpers');
+
+describe('Failing contract interaction ', function () {
+  const ganacheOptions = {
+    hardfork: 'london',
+    accounts: [
+      {
+        secretKey:
+          '0x7C9529A67102755B7E6102D6D950AC5D5863C98713805CEC576B945B15B71EAC',
+        balance: convertToHexValue(25000000000000000000),
+      },
+    ],
+  };
+  it('should display a warning when the contract interaction is expected to fail', async function () {
+    await withFixtures(
+      {
+        dapp: true,
+        fixtures: 'imported-account',
+        ganacheOptions,
+        title: this.test.title,
+      },
+      async ({ driver }) => {
+        await driver.navigate();
+        await driver.fill('#password', 'correct horse battery staple');
+        await driver.press('#password', driver.Key.ENTER);
+
+        // connects the dapp
+        await driver.openNewPage('http://127.0.0.1:8080/');
+        await driver.clickElement({ text: 'Connect', tag: 'button' });
+        await driver.waitUntilXWindowHandles(3);
+        let windowHandles = await driver.getAllWindowHandles();
+        const extension = windowHandles[0];
+        const dapp = await driver.switchToWindowWithTitle(
+          'E2E Test Dapp',
+          windowHandles,
+        );
+        const popup = windowHandles.find(
+          (handle) => handle !== extension && handle !== dapp,
+        );
+        await driver.switchToWindow(popup);
+        await driver.clickElement({ text: 'Next', tag: 'button' });
+        await driver.clickElement({ text: 'Connect', tag: 'button' });
+        await driver.waitUntilXWindowHandles(2);
+
+        // deploy contract
+        await driver.switchToWindow(dapp);
+        await driver.clickElement('#deployFailingButton');
+        await driver.waitUntilXWindowHandles(3);
+        windowHandles = await driver.getAllWindowHandles();
+        await driver.switchToWindowWithTitle(
+          'MetaMask Notification',
+          windowHandles,
+        );
+        await driver.clickElement({ text: 'Confirm', tag: 'button' });
+        await driver.waitUntilXWindowHandles(2);
+        await driver.switchToWindow(extension);
+        await driver.clickElement('[data-testid="home__activity-tab"]');
+        await driver.waitForSelector(
+          '.transaction-list__completed-transactions .transaction-list-item:nth-of-type(1)',
+          { timeout: 10000 },
+        );
+        const completedTx = await driver.findElement('.list-item__title');
+        const completedTxText = await completedTx.getText();
+        assert.equal(completedTxText, 'Contract Deployment');
+
+        // calls failing contract method
+        await driver.switchToWindow(dapp);
+        await driver.clickElement('#sendFailingButton');
+        await driver.waitUntilXWindowHandles(3);
+        windowHandles = await driver.getAllWindowHandles();
+        await driver.switchToWindowWithTitle(
+          'MetaMask Notification',
+          windowHandles,
+        );
+
+        // display warning when transaction is expected to fail
+        const warningText =
+          'This transaction is expected to fail. Trying to execute it is expected to be expensive but fail, and is not recommended.';
+        const warning = await driver.findElement(
+          '.actionable-message__message',
+        );
+        const confirmButton = await driver.findElement(
+          '[data-testid="page-container-footer-next"]',
+        );
+        assert.equal(await warning.getText(), warningText);
+        assert.equal(await confirmButton.isEnabled(), false);
+
+        // dismiss warning and confirm the transaction
+        await driver.clickElement({ text: 'I will try anyway', tag: 'button' });
+        await driver.clickElement({ text: 'Confirm', tag: 'button' });
+        await driver.waitUntilXWindowHandles(2);
+        await driver.switchToWindow(extension);
+        await driver.waitForSelector(
+          '.transaction-list__completed-transactions .transaction-list-item:nth-of-type(2)',
+          { timeout: 10000 },
+        );
+
+        // display the transaction status
+        const transactionStatus = await driver.findElement(
+          '.transaction-list-item:nth-of-type(1) .transaction-status',
+        );
+        assert.equal(await transactionStatus.getText(), 'Failed');
+      },
+    );
+  });
+});