diff --git a/compiler/backend/src/org/jetbrains/jet/codegen/CompilationErrorHandler.java b/compiler/backend/src/org/jetbrains/jet/codegen/CompilationErrorHandler.java
index b6ea15aa364..8af5d8c831c 100644
--- a/compiler/backend/src/org/jetbrains/jet/codegen/CompilationErrorHandler.java
+++ b/compiler/backend/src/org/jetbrains/jet/codegen/CompilationErrorHandler.java
@@ -7,10 +7,10 @@ public interface CompilationErrorHandler {
 
     CompilationErrorHandler THROW_EXCEPTION = new CompilationErrorHandler() {
         @Override
-        public void reportError(String message, String fileUrl) {
-            throw new IllegalStateException(message);
+        public void reportException(Throwable exception, String fileUrl) {
+            throw new IllegalStateException(exception);
         }
     };
 
-    void reportError(String message, String fileUrl);
+    void reportException(Throwable exception, String fileUrl);
 }
diff --git a/compiler/backend/src/org/jetbrains/jet/codegen/GenerationState.java b/compiler/backend/src/org/jetbrains/jet/codegen/GenerationState.java
index b2097c462e1..0002b318992 100644
--- a/compiler/backend/src/org/jetbrains/jet/codegen/GenerationState.java
+++ b/compiler/backend/src/org/jetbrains/jet/codegen/GenerationState.java
@@ -112,7 +112,7 @@ public class GenerationState {
                     generateNamespace(namespace);
                 }
                 catch (Throwable e) {
-                    errorHandler.reportError("Exception: " + e.getClass().getCanonicalName() + ": " + e.getMessage(), namespace.getContainingFile().getVirtualFile().getUrl());
+                    errorHandler.reportException(e, namespace.getContainingFile().getVirtualFile().getUrl());
                 }
             }
         }
diff --git a/compiler/frontend/src/org/jetbrains/jet/lang/descriptors/TypeParameterDescriptor.java b/compiler/frontend/src/org/jetbrains/jet/lang/descriptors/TypeParameterDescriptor.java
index 536d0e11600..d02bbb786af 100644
--- a/compiler/frontend/src/org/jetbrains/jet/lang/descriptors/TypeParameterDescriptor.java
+++ b/compiler/frontend/src/org/jetbrains/jet/lang/descriptors/TypeParameterDescriptor.java
@@ -144,7 +144,7 @@ public class TypeParameterDescriptor extends DeclarationDescriptorImpl implement
             defaultType = new JetTypeImpl(
                             Collections.<AnnotationDescriptor>emptyList(),
                             getTypeConstructor(),
-                            TypeUtils.hasNullableBound(this),
+                            TypeUtils.hasNullableLowerBound(this),
                             Collections.<TypeProjection>emptyList(),
                             new LazyScopeAdapter(new LazyValue<JetScope>() {
                                 @Override
diff --git a/compiler/frontend/src/org/jetbrains/jet/lang/resolve/TypeResolver.java b/compiler/frontend/src/org/jetbrains/jet/lang/resolve/TypeResolver.java
index 012932b4653..5fd39256dfe 100644
--- a/compiler/frontend/src/org/jetbrains/jet/lang/resolve/TypeResolver.java
+++ b/compiler/frontend/src/org/jetbrains/jet/lang/resolve/TypeResolver.java
@@ -78,7 +78,7 @@ public class TypeResolver {
                         result[0] = new JetTypeImpl(
                                 annotations,
                                 typeParameterDescriptor.getTypeConstructor(),
-                                nullable || TypeUtils.hasNullableBound(typeParameterDescriptor),
+                                nullable || TypeUtils.hasNullableLowerBound(typeParameterDescriptor),
                                 Collections.<TypeProjection>emptyList(),
                                 getScopeForTypeParameter(typeParameterDescriptor)
                         );
diff --git a/compiler/frontend/src/org/jetbrains/jet/lang/types/JetTypeChecker.java b/compiler/frontend/src/org/jetbrains/jet/lang/types/JetTypeChecker.java
index 6573f54fc19..d06f37c4841 100644
--- a/compiler/frontend/src/org/jetbrains/jet/lang/types/JetTypeChecker.java
+++ b/compiler/frontend/src/org/jetbrains/jet/lang/types/JetTypeChecker.java
@@ -97,12 +97,14 @@ public class JetTypeChecker {
             if (!supertype.isNullable() && subtype.isNullable()) {
                 return false;
             }
+            subtype = TypeUtils.makeNotNullable(subtype);
+            supertype = TypeUtils.makeNotNullable(supertype);
             if (JetStandardClasses.isNothingOrNullableNothing(subtype)) {
                 return true;
             }
             @Nullable JetType closestSupertype = findCorrespondingSupertype(subtype, supertype);
             if (closestSupertype == null) {
-                if (!constraintBuilder.noCorrespondingSupertype(subtype, supertype)) return false;
+                return constraintBuilder.noCorrespondingSupertype(subtype, supertype); // if this returns true, there still isn't any supertype to continue with
             }
 
             return checkSubtypeForTheSameConstructor(closestSupertype, supertype);
diff --git a/compiler/frontend/src/org/jetbrains/jet/lang/types/TypeSubstitutor.java b/compiler/frontend/src/org/jetbrains/jet/lang/types/TypeSubstitutor.java
index 48699139afd..dac071017cd 100644
--- a/compiler/frontend/src/org/jetbrains/jet/lang/types/TypeSubstitutor.java
+++ b/compiler/frontend/src/org/jetbrains/jet/lang/types/TypeSubstitutor.java
@@ -130,7 +130,7 @@ public class TypeSubstitutor {
         if (value != null) {
             assert constructor.getDeclarationDescriptor() instanceof TypeParameterDescriptor;
 
-            return substitutionResult((TypeParameterDescriptor) constructor.getDeclarationDescriptor(), howThisTypeIsUsed, Variance.INVARIANT, value).getType();
+            return TypeUtils.makeNullableIfNeeded(substitutionResult((TypeParameterDescriptor) constructor.getDeclarationDescriptor(), howThisTypeIsUsed, Variance.INVARIANT, value).getType(), type.isNullable());
 
 //            if (!allows(howThisTypeIsUsed, value.getProjectionKind())) {
 //                throw new SubstitutionException("!!" + value.toString());
diff --git a/compiler/frontend/src/org/jetbrains/jet/lang/types/TypeUtils.java b/compiler/frontend/src/org/jetbrains/jet/lang/types/TypeUtils.java
index cb6360ab21d..6304adf84db 100644
--- a/compiler/frontend/src/org/jetbrains/jet/lang/types/TypeUtils.java
+++ b/compiler/frontend/src/org/jetbrains/jet/lang/types/TypeUtils.java
@@ -385,8 +385,8 @@ public class TypeUtils {
         return result;
     }
 
-    public static boolean hasNullableBound(@NotNull TypeParameterDescriptor typeParameterDescriptor) {
-        for (JetType bound : typeParameterDescriptor.getUpperBounds()) {
+    public static boolean hasNullableLowerBound(@NotNull TypeParameterDescriptor typeParameterDescriptor) {
+        for (JetType bound : typeParameterDescriptor.getLowerBounds()) {
             if (bound.isNullable()) {
                 return true;
             }
diff --git a/compiler/frontend/src/org/jetbrains/jet/lang/types/inference/ConstraintSystemImpl.java b/compiler/frontend/src/org/jetbrains/jet/lang/types/inference/ConstraintSystemImpl.java
index db786b2b28d..e693c3dddf1 100644
--- a/compiler/frontend/src/org/jetbrains/jet/lang/types/inference/ConstraintSystemImpl.java
+++ b/compiler/frontend/src/org/jetbrains/jet/lang/types/inference/ConstraintSystemImpl.java
@@ -209,7 +209,7 @@ public class ConstraintSystemImpl implements ConstraintSystem {
         public boolean noCorrespondingSupertype(@NotNull JetType subtype, @NotNull JetType supertype) {
             boolean result = delegate.noCorrespondingSupertype(subtype, supertype);
             if (!result) {
-                println("-- " + subtype + " has supertype corresponding to " + supertype);
+                println("-- " + subtype + " has no supertype corresponding to " + supertype);
             }
             return result;
         }
@@ -273,9 +273,12 @@ public class ConstraintSystemImpl implements ConstraintSystem {
         DeclarationDescriptor declarationDescriptor = type.getConstructor().getDeclarationDescriptor();
         if (declarationDescriptor instanceof TypeParameterDescriptor) {
             TypeParameterDescriptor typeParameterDescriptor = (TypeParameterDescriptor) declarationDescriptor;
-            UnknownType unknownType = unknownTypes.get(typeParameterDescriptor);
-            if (unknownType != null) {
-                return unknownType;
+            // Checking that this is not a T?, but exactly T
+            if (typeParameterDescriptor.getDefaultType().isNullable() == type.isNullable()) {
+                UnknownType unknownType = unknownTypes.get(typeParameterDescriptor);
+                if (unknownType != null) {
+                    return unknownType;
+                }
             }
         }
 
diff --git a/compiler/testData/checkerWithErrorTypes/full/Variance.jet b/compiler/testData/checkerWithErrorTypes/full/Variance.jet
index 9b6531ffd02..0607a6f0a13 100644
--- a/compiler/testData/checkerWithErrorTypes/full/Variance.jet
+++ b/compiler/testData/checkerWithErrorTypes/full/Variance.jet
@@ -18,8 +18,8 @@ fun foo(c: Consumer<Int>, p: Producer<Int>, u: Usual<Int>) {
 }
 
 //Arrays copy example
-class Array<T>(val length : Int) {
-    fun get(index : Int) : T { return null }
+class Array<T>(val length : Int, val t : T) {
+    fun get(index : Int) : T { return t }
     fun set(index : Int, value : T) { /* ... */ }
 }
 
diff --git a/compiler/testData/checkerWithErrorTypes/full/regression/kt313.jet b/compiler/testData/checkerWithErrorTypes/full/regression/kt313.jet
new file mode 100644
index 00000000000..d22f0dc4f2e
--- /dev/null
+++ b/compiler/testData/checkerWithErrorTypes/full/regression/kt313.jet
@@ -0,0 +1,11 @@
+// KT-313 Bug in substitutions in a function returning its type parameter T
+
+fun <T> Iterable<T>.join(separator : String?) : String {
+    return separator.npe()
+}
+
+fun <T : Any> T?.npe() : T {
+    if (this == null)
+      throw NullPointerException()
+    return this;
+}
diff --git a/compiler/testData/codegen/regressions/kt326.jet b/compiler/testData/codegen/regressions/kt326.jet
index 8afc31e7eab..3d9b4ad8e54 100644
--- a/compiler/testData/codegen/regressions/kt326.jet
+++ b/compiler/testData/codegen/regressions/kt326.jet
@@ -1,7 +1,7 @@
 namespace test
 
 class List<T>(len: Int) {
-  val a : Array<T> = Array<T>(len)
+  val a : Array<T?> = Array<T?>(len)
 
   fun reverse() {
     var i = 0
@@ -29,7 +29,7 @@ fun box() : String {
 
   val c = List<Array<Int>>(1)
   c.a[0] = Array<Int>(4,{-1})
-  println(c.a[0].size)
+  println(c.a[0]?.size)
 
   val e = List<Int>(5)
   e.a[0] = 0
diff --git a/compiler/testData/codegen/traits/stdlib.jet b/compiler/testData/codegen/traits/stdlib.jet
index aa9fe5d5072..af0db549b40 100644
--- a/compiler/testData/codegen/traits/stdlib.jet
+++ b/compiler/testData/codegen/traits/stdlib.jet
@@ -36,8 +36,8 @@ trait WriteOnlyArray<in T> : ISized {
   }
 }
 
-class MutableArray<T>(length: Int) : ReadOnlyArray<T>, WriteOnlyArray<T> {
-    private val array = Array<T>(length)
+class MutableArray<T>(length: Int, init : fun(Int) : T) : ReadOnlyArray<T>, WriteOnlyArray<T> {
+    private val array = Array<T>(length, init)
 
     override fun get(index : Int) : T = array[index]
     override fun set(index : Int, value : T) : Unit { array[index] = value }
@@ -47,7 +47,7 @@ class MutableArray<T>(length: Int) : ReadOnlyArray<T>, WriteOnlyArray<T> {
 }
 
 fun box() : String {
-    var a = MutableArray<Int> (4)
+    var a = MutableArray<Int> (4, {0})
     a [0] = 10
     a.set(1, 2, 13)
     a [3] = 40
diff --git a/compiler/tests/org/jetbrains/jet/codegen/ArrayGenTest.java b/compiler/tests/org/jetbrains/jet/codegen/ArrayGenTest.java
index de66903a8e9..7a1b926962c 100644
--- a/compiler/tests/org/jetbrains/jet/codegen/ArrayGenTest.java
+++ b/compiler/tests/org/jetbrains/jet/codegen/ArrayGenTest.java
@@ -38,7 +38,7 @@ public class ArrayGenTest extends CodegenTestCase {
     }
 
     public void testCreateMultiGenerics () throws Exception {
-        loadText("class L<T>() { val a = Array<T>(5) } fun foo() = L<Int>.a");
+        loadText("class L<T>() { val a = Array<T?>(5) } fun foo() = L<Int>.a");
         System.out.println(generateToText());
         Method foo = generateFunction();
         Object invoke = foo.invoke(null);
diff --git a/docs/exPuzzlers/kotlin/std.kt b/docs/exPuzzlers/kotlin/std.kt
index ba01f1845f8..797a7540927 100644
--- a/docs/exPuzzlers/kotlin/std.kt
+++ b/docs/exPuzzlers/kotlin/std.kt
@@ -56,6 +56,6 @@ namespace io {
 
 namespace string {
     fun String.replaceAll(pattern : String, replacement : String) : String {
-        return java.util.regex.Pattern.compile(pattern).matcher(this).replaceAll(replacement).npe()
+        return (this as java.lang.String).replace(pattern as CharSequence, replacement as CharSequence).npe()
     }
 }
\ No newline at end of file
diff --git a/docs/exPuzzlers/src/_03_character/_20_Whats_My_Class/Me.kt b/docs/exPuzzlers/src/_03_character/_20_Whats_My_Class/Me.kt
index 0462cfba23e..e9012cc3994 100644
--- a/docs/exPuzzlers/src/_03_character/_20_Whats_My_Class/Me.kt
+++ b/docs/exPuzzlers/src/_03_character/_20_Whats_My_Class/Me.kt
@@ -15,5 +15,4 @@ fun main(args : Array<String>) {
     // Note: \u000A is Unicode representation of linefeed (LF)
     val c : Char = 0x000A .chr;
     println(c);
-    println("a\u \u0 \u00 \u000 \u0000 \u0AaA \u0AAz.length( ) + \u0022b")
 }
diff --git a/idea/src/org/jetbrains/jet/plugin/compiler/JetCompiler.java b/idea/src/org/jetbrains/jet/plugin/compiler/JetCompiler.java
index f09506cd271..0a16cb56f58 100644
--- a/idea/src/org/jetbrains/jet/plugin/compiler/JetCompiler.java
+++ b/idea/src/org/jetbrains/jet/plugin/compiler/JetCompiler.java
@@ -104,8 +104,8 @@ public class JetCompiler implements TranslatingCompiler {
                 if (!errors) {
                     generationState.compileCorrectNamespaces(bindingContext, namespaces, new CompilationErrorHandler() {
                         @Override
-                        public void reportError(String message, String fileUrl) {
-                            compileContext.addMessage(CompilerMessageCategory.WARNING, message, fileUrl, 0, 0);
+                        public void reportException(Throwable exception, String fileUrl) {
+                            compileContext.addMessage(CompilerMessageCategory.WARNING, exception.getClass().getCanonicalName() + ": " + exception.getMessage(), fileUrl, 0, 0);
                         }
                     });
 ///////////
diff --git a/idea/testData/checker/Variance.jet b/idea/testData/checker/Variance.jet
index 0f27cbc73ff..0d173e86dc8 100644
--- a/idea/testData/checker/Variance.jet
+++ b/idea/testData/checker/Variance.jet
@@ -18,8 +18,8 @@ fun foo(c: Consumer<Int>, p: Producer<Int>, u: Usual<Int>) {
 }
 
 //Arrays copy example
-class Array<T>(val length : Int) {
-    fun get(index : Int) : T { return null }
+class Array<T>(val length : Int, val t : T) {
+    fun get(index : Int) : T { return t }
     fun set(index : Int, value : T) { /* ... */ }
 }