--- a/spec/latest/index.html	Thu Aug 04 12:51:58 2011 -0700
+++ b/spec/latest/index.html	Thu Aug 04 13:00:51 2011 -0700
@@ -1622,8 +1622,12 @@
     of a list (see <span a="#list-processing">List Processing</span>)).
   </p>
   <p>
-    A <tref>local context</tref> is identified within an associative array having a key of <code>@context</code> with an associative
-    array value. When processing a <tref>local context</tref>, special rules apply:
+    A <tref>local context</tref> is identified within an associative array having a key of <code>@context</code>
+    with string or an associative array value. When processing a <tref>local context</tref>, special rules apply:
+  </p>
+  <p>
+    If the <code>@context</code> value is a simple string, it MUST have a lexical form of IRI and used to initialize
+    a new JSON document which is used as if an associative array were evaluated directly.
   </p>
   <ul>
     <li>The key <code>@base</code> MUST have a value of a simple string with the lexical