GHC 6.4 has rather conservative constraints on instances to guarantee termination. GHC 6.5 has more liberal constraints; see http://haskell.galois.com/cgi-bin/haskell-prime/trac.cgi/wiki/FlexibleInstan... Unfortunately instances generated by newtype-deriving need not satisfy either of these constraints (but the newtypes are required to be non-recursive). I can't construct a problem example for the 6.4 rules (but nor is there an obvious termination ordering). However the following is non-terminating (caught by the depth limit) for GHC 6.5: class C a where foo :: a -> Bool -- instance C (f (Maybe a) a a) => C (Bar f a) newtype Bar f a = Bar (f (Maybe a) a a) deriving C instance C (Bar (,,) a) => C (a,b,c) where foo (a,b,c) = foo (Bar (Just a,a,a)) f = foo ('a', 'b', 'c')