diff --git a/compiler/fir/raw-fir/light-tree2fir/src/org/jetbrains/kotlin/fir/lightTree/converter/BaseConverter.kt b/compiler/fir/raw-fir/light-tree2fir/src/org/jetbrains/kotlin/fir/lightTree/converter/BaseConverter.kt
index 7e46150e7f2..aeb2b7d1139 100644
--- a/compiler/fir/raw-fir/light-tree2fir/src/org/jetbrains/kotlin/fir/lightTree/converter/BaseConverter.kt
+++ b/compiler/fir/raw-fir/light-tree2fir/src/org/jetbrains/kotlin/fir/lightTree/converter/BaseConverter.kt
@@ -113,6 +113,16 @@ open class BaseConverter(
         return kidsRef.get()
     }
 
+    fun LighterASTNode?.getFirstChild(): LighterASTNode? {
+        val firstChild: LighterASTNode?
+        try {
+            firstChild = getChildrenAsArray()[0]
+        } catch (e: ArrayIndexOutOfBoundsException) {
+            return null
+        }
+        return firstChild
+    }
+
     @OptIn(ExperimentalContracts::class)
     protected inline fun LighterASTNode.forEachChildren(vararg skipTokens: KtToken, f: (LighterASTNode) -> Unit) {
         val kidsArray = this.getChildrenAsArray()
diff --git a/compiler/fir/raw-fir/light-tree2fir/src/org/jetbrains/kotlin/fir/lightTree/converter/DeclarationsConverter.kt b/compiler/fir/raw-fir/light-tree2fir/src/org/jetbrains/kotlin/fir/lightTree/converter/DeclarationsConverter.kt
index 86397ac776e..c3532a3dc64 100644
--- a/compiler/fir/raw-fir/light-tree2fir/src/org/jetbrains/kotlin/fir/lightTree/converter/DeclarationsConverter.kt
+++ b/compiler/fir/raw-fir/light-tree2fir/src/org/jetbrains/kotlin/fir/lightTree/converter/DeclarationsConverter.kt
@@ -17,6 +17,7 @@ import org.jetbrains.kotlin.fir.builder.Context
 import org.jetbrains.kotlin.fir.builder.extractContractDescriptionIfPossible
 import org.jetbrains.kotlin.fir.builder.generateAccessorsByDelegate
 import org.jetbrains.kotlin.fir.contracts.FirContractDescription
+import org.jetbrains.kotlin.fir.contracts.builder.buildRawContractDescription
 import org.jetbrains.kotlin.fir.declarations.*
 import org.jetbrains.kotlin.fir.declarations.builder.*
 import org.jetbrains.kotlin.fir.declarations.impl.FirDeclarationStatusImpl
@@ -1083,6 +1084,7 @@ class DeclarationsConverter(
         }
         var block: LighterASTNode? = null
         var expression: LighterASTNode? = null
+        var outerContractDescription: FirContractDescription? = null
         getterOrSetter.forEachChildren {
             if (it.asText == "set") isGetter = false
             when (it.tokenType) {
@@ -1090,6 +1092,7 @@ class DeclarationsConverter(
                 MODIFIER_LIST -> modifiers = convertModifierList(it)
                 TYPE_REFERENCE -> returnType = convertType(it)
                 VALUE_PARAMETER_LIST -> firValueParameters = convertSetterParameter(it, propertyTypeRef)
+                CONTRACT_EFFECT_LIST -> outerContractDescription = obtainContractDescription(it)
                 BLOCK -> block = it
                 else -> if (it.isExpression()) expression = it
             }
@@ -1137,10 +1140,12 @@ class DeclarationsConverter(
                 valueParameters += firValueParameters
             }
 
-            val (body, contractDescription) = convertFunctionBody(block, expression)
-            this.body = body
+            val hasContractEffectList = outerContractDescription != null
+            val bodyWithContractDescription = convertFunctionBody(block, expression, hasContractEffectList)
+            this.body = bodyWithContractDescription.first
+            val contractDescription = outerContractDescription ?: bodyWithContractDescription.second
             contractDescription?.let {
-                this.contractDescription = contractDescription
+                this.contractDescription = it
             }
             context.firFunctionTargets.removeLast()
         }.also {
@@ -1148,6 +1153,31 @@ class DeclarationsConverter(
         }
     }
 
+    private fun obtainContractDescription(rawContractDescription: LighterASTNode): FirContractDescription? =
+        buildRawContractDescription {
+            source = rawContractDescription.toFirSourceElement()
+            extractRawEffects(rawContractDescription, rawEffects)
+        }
+
+    private fun extractRawEffects(rawContractDescription: LighterASTNode, destination: MutableList<FirExpression>) {
+        rawContractDescription.forEachChildren {
+            val errorReason = "The contract effect is not an expression"
+            when (it.tokenType) {
+                CONTRACT_EFFECT -> {
+                    val effect = it.getFirstChild()
+                    if (effect == null) {
+                        val errorExpression = buildErrorExpression(null, ConeSimpleDiagnostic(errorReason, DiagnosticKind.ExpressionRequired))
+                        destination.add(errorExpression)
+                    } else {
+                        val expression = expressionConverter.convertExpression(effect, errorReason)
+                        destination.add(expression as FirExpression)
+                    }
+                }
+                else -> Unit
+            }
+        }
+    }
+
     /**
      * this is just a VALUE_PARAMETER_LIST
      *
@@ -1195,6 +1225,7 @@ class DeclarationsConverter(
         var expression: LighterASTNode? = null
         var hasEqToken = false
         var typeParameterList: LighterASTNode? = null
+        var outerContractDescription: FirContractDescription? = null
         functionDeclaration.forEachChildren {
             when (it.tokenType) {
                 MODIFIER_LIST -> modifiers = convertModifierList(it)
@@ -1204,6 +1235,7 @@ class DeclarationsConverter(
                 COLON -> isReturnType = true
                 TYPE_REFERENCE -> if (isReturnType) returnType = convertType(it) else receiverType = convertType(it)
                 TYPE_CONSTRAINT_LIST -> typeConstraints += convertTypeConstraints(it)
+                CONTRACT_EFFECT_LIST -> outerContractDescription = obtainContractDescription(it)
                 BLOCK -> block = it
                 EQ -> hasEqToken = true
                 else -> if (it.isExpression()) expression = it
@@ -1269,8 +1301,11 @@ class DeclarationsConverter(
                     addCapturedTypeParameters(typeParameters)
                 }
                 valueParametersList?.let { list -> valueParameters += convertValueParameters(list).map { it.firValueParameter } }
-                val (body, contractDescription) = convertFunctionBody(block, expression)
-                this.body = body
+
+                val hasContractEffectList = outerContractDescription != null
+                val bodyWithContractDescription = convertFunctionBody(block, expression, hasContractEffectList)
+                this.body = bodyWithContractDescription.first
+                val contractDescription = outerContractDescription ?: bodyWithContractDescription.second
                 contractDescription?.let {
                     // TODO: add error reporting for contracts on lambdas
                     if (this is FirSimpleFunctionBuilder) {
@@ -1288,9 +1323,20 @@ class DeclarationsConverter(
      * @see org.jetbrains.kotlin.parsing.KotlinParsing.parseFunctionBody
      * @see org.jetbrains.kotlin.fir.builder.RawFirBuilder.Visitor.buildFirBody
      */
-    private fun convertFunctionBody(blockNode: LighterASTNode?, expression: LighterASTNode?): Pair<FirBlock?, FirContractDescription?> {
+    private fun convertFunctionBody(
+        blockNode: LighterASTNode?,
+        expression: LighterASTNode?,
+        hasContractEffectList: Boolean = false
+    ): Pair<FirBlock?, FirContractDescription?> {
         return when {
-            blockNode != null -> convertBlock(blockNode).extractContractDescriptionIfPossible()
+            blockNode != null -> {
+                val block = convertBlock(blockNode)
+                if (hasContractEffectList) {
+                    block to null
+                } else {
+                    block.extractContractDescriptionIfPossible()
+                }
+            }
             expression != null -> FirSingleExpressionBlock(
                 expressionConverter.getAsFirExpression<FirExpression>(expression, "Function has no body (but should)").toReturn()
             ) to null