diff --git a/pep-0484.txt b/pep-0484.txt
index 1858e4cc4..491e31024 100644
--- a/pep-0484.txt
+++ b/pep-0484.txt
@@ -448,6 +448,92 @@ is not generic but implicitly inherits from ``Iterable[Any]``::
 Generic metaclasses are not supported.
 
 
+Scoping rules for type variables
+--------------------------------
+
+Type variables follow normal name resolution rules.
+However, there are some special cases in the static typechecking context:
+
+* A type variable used in a generic function could be inferred to be equal to
+  different types in the same code block. Example::
+
+    from typing import TypeVar, Generic
+
+    T = TypeVar('T')
+
+    def fun_1(x: T) -> T: ... # T here
+    def fun_2(x: T) -> T: ... # and here could be different
+
+    fun_1(1)                  # This is OK, T is inferred to be int
+    fun_2('a')                # This is aslo OK, now T is str
+
+* A type variable used in a method of a generic class that coincisides
+  with one of the variables that parameterize this class is always bound
+  to that variable. Example::
+
+    from typing import TypeVar, Generic
+
+    T = TypeVar('T')
+
+    class MyClass(Generic[T]):
+        def meth_1(self, x: T) -> T: ... # T here
+        def meth_2(self, x: T) -> T: ... # and here are always the same
+
+    a = MyClass() # type: MyClass[int]
+    a.meth_1(1)   # OK
+    a.meth_2('a') # This is an error!
+
+* A type variable used in a method that does not match any of the variables
+  that parameterize the class makes this method a generic function in that
+  variable::
+
+    T = TypeVar('T')
+    S = TypeVar('S')
+    class Foo(Generic[T]):
+        def method(self, x: T, y: S) -> S:
+            ...
+
+    x = Foo() # type: Foo[int]
+    y = x.method(0, "abc") # inferred type of y is str
+
+* Unbound type variables should not appear in the bodies of generic functions,
+  or in the class bodies apart from method definitions::
+
+    T = TypeVar('T')
+    S = TypeVar('S')
+
+    def a_fun(x: T) -> None:
+        # this is OK
+        y = [] # type: List[T]
+        # but below is an error!
+        y = [] # type: List[S]
+
+    class Bar(Generic[T]):
+        # this is also an error
+        an_attr = [] # type: List[S]
+
+        def do_something(x: S) -> S: # this is OK though
+            ...
+
+* A generic class definition that appears inside a generic function
+  should not use type variables that parameterize the generic function::
+
+    from typing import List
+
+    def a_fun(x: T) -> None:
+
+        # This is OK
+        a_list = [] # type: List[T]
+        ...
+
+        # This is however illegal
+        class MyGeneric(Generic[T]):
+            ...
+
+* A generic class nested in another generic class cannot use the same
+  type variables, unless the inner class definition is inside a function.
+
+
 Instantiating generic classes and type erasure
 ----------------------------------------------
 
@@ -1297,11 +1383,11 @@ from ``UserId`` where ``int`` is expected. Examples::
 
         num = UserId(5) + 1     # type: int
 
-``NewType`` accepts only one argument that shoud be a proper class,
-i.e., not a type construct like ``Union``, etc. The function returned
-by ``NewType`` accepts only one argument; this is equivalent to supporting
-only one constructor accepting an instance of the base class (see above).
-Example::
+``NewType`` accepts exactly two arguments: a name for the new unique type,
+and a base class. The latter should be a proper class, i.e.,
+not a type construct like ``Union``, etc. The function returned by ``NewType``
+accepts only one argument; this is equivalent to supporting only one
+constructor accepting an instance of the base class (see above). Example::
 
   class PacketId:
       def __init__(self, major: int, minor: int) -> None: