diff --git a/doc/contracts.md b/doc/contracts.md
index 079e137..e81dd59 100644
--- a/doc/contracts.md
+++ b/doc/contracts.md
@@ -32,12 +32,12 @@ can still receive; the fee is then taken from the received output. `--no-payjoin
 the receiver from adding an input and cannot be used together with `--use-inputs`.
 
 Inputs and outputs are normally picked when signing. `--add-outputs` picks and locks them
-during `new`, but they are still only added to the slate when signing. `--use-inputs` and
-`--make-outputs` limit the selection but do not lock anything early. Each party chooses
-`--min_conf` when it first joins and cannot change it later. The same limit is used for the fee
-estimate, so any required inputs need enough confirmations at that point. A value of `0` allows
-unconfirmed non-coinbase outputs. Open contracts do not reserve funds, so a late-locked contract
-can fail if another transaction spends the available outputs first.
+during `new`. Prepared outputs appear as unconfirmed in the wallet, but are only added to
+the slate when signing. Using `--use-inputs` or `--make-outputs` during `new` does the same.
+Each party chooses `--min_conf` when it first joins and cannot change it later. The same limit
+is used for the fee estimate, so any required inputs need enough confirmations at that point.
+A value of `0` allows unconfirmed non-coinbase outputs. Open contracts do not reserve funds,
+so a late-locked contract can fail if another transaction spends the available outputs first.
 
 ## View and revoke
 
diff --git a/libwallet/src/contract/actions/README.md b/libwallet/src/contract/actions/README.md
index f1f88a6..503dd71 100644
--- a/libwallet/src/contract/actions/README.md
+++ b/libwallet/src/contract/actions/README.md
@@ -37,8 +37,6 @@ Separating side effects until the 'save_step' part would make these functions mu
 
 #### TODOs
 
- - Decide whether `--use-inputs` or `--make-outputs` should imply early locking; currently
-   only `--add-outputs` locks during `new`.
  - Reserve funds across open late-locked contracts, or make the possible signing failure
    clearer to callers.
  - Handle the coinbase flows. Coinbase inputs are built into the slate, but nothing else
diff --git a/src/cmd/wallet_args.rs b/src/cmd/wallet_args.rs
index 7d7836e..664c854 100644
--- a/src/cmd/wallet_args.rs
+++ b/src/cmd/wallet_args.rs
@@ -1032,7 +1032,6 @@ pub fn parse_contract_new_args(
 		parse_required(args, "minimum_confirmations")?,
 		"minimum_confirmations",
 	)?;
-	let add_outputs = args.is_present("add-outputs");
 	let as_json = args.is_present("as-json");
 	let no_payjoin = args.is_present("no-payjoin");
 	let use_inputs = match args.value_of("use-inputs") {
@@ -1065,6 +1064,10 @@ pub fn parse_contract_new_args(
 		}
 		None => None,
 	};
+	// Check the flags because use_inputs also contains the payjoin default.
+	let add_outputs = args.is_present("add-outputs")
+		|| args.is_present("use-inputs")
+		|| args.is_present("make-outputs");
 
 	let num_participants = match args.value_of("num-participants") {
 		Some(v) => v.parse::<u8>().map_err(|e| {
diff --git a/tests/cmd_line_contract.rs b/tests/cmd_line_contract.rs
index a043c6b..ab8dda6 100644
--- a/tests/cmd_line_contract.rs
+++ b/tests/cmd_line_contract.rs
@@ -257,3 +257,22 @@ fn parses_contract_min_confirmations() {
 	let parsed = grin_wallet::cmd::wallet_args::parse_contract_setup_args(sign_args).unwrap();
 	assert_eq!(parsed.minimum_confirmations, Some(3));
 }
+
+#[test]
+fn selection_locks_early() {
+	let yml = load_yaml!("../src/bin/grin-wallet.yml");
+	let app = App::from_yaml(yml);
+	let account = "default".to_string();
+	let parse = |extra: &[&str]| {
+		let mut command = vec!["grin-wallet", "contract", "new", "--send", "1"];
+		command.extend_from_slice(extra);
+		let args = app.clone().get_matches_from_safe(command).unwrap();
+		let contract = args.subcommand_matches("contract").unwrap();
+		let new_args = contract.subcommand_matches("new").unwrap();
+		grin_wallet::cmd::wallet_args::parse_contract_new_args(new_args, &account).unwrap()
+	};
+
+	assert!(!parse(&[]).add_outputs);
+	assert!(parse(&["--use-inputs", "commitment"]).add_outputs);
+	assert!(parse(&["--make-outputs", "1"]).add_outputs);
+}