--- a/spec/latest/json-ld-api/index.html	Tue Dec 27 10:57:06 2011 -0800
+++ b/spec/latest/json-ld-api/index.html	Tue Dec 27 17:18:02 2011 -0800
@@ -827,9 +827,8 @@
                   mapping</tref>.</li>
               </ol>
             </li>
-            <li>If the <tref>local context</tref> is not empty, merge the of <tref>local context</tref>
-              into the <tref>active context</tref>. Set <tref>local context</tref> to a new empty context and repeat
-              the <a href="#object-context">Step 3.2</a> until no entries are added to the <tref>local
+            <li>Merge the <tref>local context</tref> into the <tref>active context</tref>.</li>
+            <li>Repeat <a href="#object-context">Step 3.2</a> until no entries are added to the <tref>local
               context</tref>.</li>
           </ol>
         </li>
@@ -837,6 +836,12 @@
     </li>
   </ol>
   
+  <p class="note">It can be difficult to distinguish between a <code>prefix:suffix</code> and an absolute IRI,
+    as a <tref>prefix</tref> may seem to be a valid IRI <em>scheme</em>. When performing repeated IRI expansion,
+    a term used as a prefix may not have a valid mapping due to dependencies in resolving term definitions. By
+    continuing <a href="#object-context">Step 3.2</a> until no changes are made, mappings to IRIs created
+    using an undefined term prefix will eventually resolve to absolute IRIs.</p>
+
   <p class="issue"><a href="https://github.com/json-ld/json-ld.org/issues/43">Issue 43</a>
     concerns performing IRI expansion in the key position of a context definition.</p>
 </section>