diff --git a/cardano-api/src/Cardano/Api.hs b/cardano-api/src/Cardano/Api.hs
index a511698f793..972a9eb9686 100644
--- a/cardano-api/src/Cardano/Api.hs
+++ b/cardano-api/src/Cardano/Api.hs
@@ -84,6 +84,7 @@ module Cardano.Api (
 
     -- ** Addresses in specific eras
     AddressInEra(..),
+    isKeyAddress,
     AddressTypeInEra(..),
     byronAddressInEra,
     shelleyAddressInEra,
diff --git a/cardano-api/src/Cardano/Api/Address.hs b/cardano-api/src/Cardano/Api/Address.hs
index 9bc7dba719e..84520e75cdc 100644
--- a/cardano-api/src/Cardano/Api/Address.hs
+++ b/cardano-api/src/Cardano/Api/Address.hs
@@ -60,7 +60,10 @@ module Cardano.Api.Address (
 
     -- * Data family instances
     AsType(AsByronAddr, AsShelleyAddr, AsByronAddress, AsShelleyAddress,
-           AsAddress, AsAddressAny, AsAddressInEra, AsStakeAddress)
+           AsAddress, AsAddressAny, AsAddressInEra, AsStakeAddress),
+
+    -- * Helpers
+    isKeyAddress
   ) where
 
 import           Prelude
@@ -74,8 +77,8 @@ import qualified Data.Text.Encoding as Text
 import           Control.Applicative
 
 import           Cardano.Api.Eras
-import           Cardano.Api.Hash
 import           Cardano.Api.HasTypeProxy
+import           Cardano.Api.Hash
 import           Cardano.Api.Key
 import           Cardano.Api.KeysByron
 import           Cardano.Api.KeysShelley
@@ -483,6 +486,18 @@ makeStakeAddress nw sc =
       (toShelleyNetwork nw)
       (toShelleyStakeCredential sc)
 
+-- ----------------------------------------------------------------------------
+-- Helpers
+--
+
+-- | Is the UTxO at the address only spendable via a key witness.
+isKeyAddress :: AddressInEra era -> Bool
+isKeyAddress (AddressInEra ByronAddressInAnyEra _) = True
+isKeyAddress (AddressInEra (ShelleyAddressInEra _) (ShelleyAddress _ pCred _)) =
+  case fromShelleyPaymentCredential pCred of
+    PaymentCredentialByKey _ -> True
+    PaymentCredentialByScript _ -> False
+
 
 -- ----------------------------------------------------------------------------
 -- Internal conversion functions
diff --git a/cardano-api/src/Cardano/Api/Query.hs b/cardano-api/src/Cardano/Api/Query.hs
index c12a4336844..13b3cd4709f 100644
--- a/cardano-api/src/Cardano/Api/Query.hs
+++ b/cardano-api/src/Cardano/Api/Query.hs
@@ -75,14 +75,14 @@ import qualified Ouroboros.Consensus.HardFork.History.Qry as Qry
 
 import           Ouroboros.Consensus.BlockchainTime.WallClock.Types (RelativeTime, SlotLength)
 import qualified Ouroboros.Consensus.Byron.Ledger as Consensus
-import           Ouroboros.Consensus.Cardano.Block (StandardCrypto, LedgerState(..))
+import           Ouroboros.Consensus.Cardano.Block (LedgerState (..), StandardCrypto)
 import qualified Ouroboros.Consensus.Cardano.Block as Consensus
 import qualified Ouroboros.Consensus.Ledger.Query as Consensus
 import qualified Ouroboros.Consensus.Shelley.Ledger as Consensus
 import           Ouroboros.Network.Block (Serialised)
 
 import           Cardano.Binary
-import           Cardano.Slotting.Time (SystemStart(..))
+import           Cardano.Slotting.Time (SystemStart (..))
 
 import qualified Cardano.Chain.Update.Validation.Interface as Byron.Update
 import qualified Cardano.Ledger.Core as Core
@@ -684,3 +684,4 @@ fromConsensusQueryResultMismatch =
 fromConsensusEraMismatch :: SListI xs
                          => Consensus.MismatchEraInfo xs -> EraMismatch
 fromConsensusEraMismatch = Consensus.mkEraMismatch
+
diff --git a/cardano-cli/src/Cardano/CLI/Shelley/Run/Transaction.hs b/cardano-cli/src/Cardano/CLI/Shelley/Run/Transaction.hs
index 9d01bea2cbf..c07ee644619 100644
--- a/cardano-cli/src/Cardano/CLI/Shelley/Run/Transaction.hs
+++ b/cardano-cli/src/Cardano/CLI/Shelley/Run/Transaction.hs
@@ -19,6 +19,7 @@ import           Prelude (String, error)
 import qualified Data.Aeson as Aeson
 import qualified Data.ByteString.Char8 as BS
 import qualified Data.ByteString.Lazy.Char8 as LBS
+import           Data.List (intersect, (\\))
 import qualified Data.Map.Strict as Map
 import qualified Data.Set as Set
 import qualified Data.Text as Text
@@ -112,6 +113,8 @@ data ShelleyTxCmdError
   | ShelleyTxCmdEraConsensusModeMismatchQuery !AnyConsensusMode !AnyCardanoEra
   | ShelleyTxCmdByronEraQuery
   | ShelleyTxCmdLocalStateQueryError !ShelleyQueryCmdLocalStateQueryError
+  | ShelleyTxCmdExpectedKeyLockedTxIn ![TxIn]
+  | ShelleyTxCmdTxInsDoNotExist ![TxIn]
 
   deriving Show
 
@@ -233,6 +236,14 @@ renderShelleyTxCmdError err =
     ShelleyTxCmdByronEraQuery -> "Query not available in Byron era"
     ShelleyTxCmdLocalStateQueryError err' -> renderLocalStateQueryError err'
     ShelleyTxCmdBalanceTxBody err' -> Text.pack $ displayError err'
+    ShelleyTxCmdExpectedKeyLockedTxIn txins ->
+      "Expected key witnessed collateral tx inputs but got script witnessed tx inputs: " <>
+      Text.singleton '\n' <>
+      Text.intercalate (Text.singleton '\n') (map renderTxIn txins)
+    ShelleyTxCmdTxInsDoNotExist txins ->
+      "The following tx input(s) were not present in the UTxO: " <>
+      Text.singleton '\n' <>
+      Text.intercalate (Text.singleton '\n') (map renderTxIn txins)
 
 renderEra :: AnyCardanoEra -> Text
 renderEra (AnyCardanoEra ByronEra)   = "Byron"
@@ -407,6 +418,7 @@ runTxBuild (AnyCardanoEra era) (AnyConsensusModeParams cModeParams) networkId mS
       consensusMode = consensusModeOnly cModeParams
       dummyFee = Just $ Lovelace 0
       onlyInputs = [input | (input,_) <- txins]
+
   case (consensusMode, cardanoEraStyle era) of
     (CardanoMode, ShelleyBasedEra sbe) -> do
       txBodyContent <-
@@ -441,10 +453,22 @@ runTxBuild (AnyCardanoEra era) (AnyConsensusModeParams cModeParams) networkId mS
                      left (ShelleyTxCmdEraConsensusModeMismatchTxBalance outBody
                             (AnyConsensusMode CardanoMode) (AnyCardanoEra era))
 
-      let utxoQuery = QueryInEra eInMode $ QueryInShelleyBasedEra sbe
+      let collateralUTxOQuery = QueryInEra eInMode $ QueryInShelleyBasedEra sbe
+                                  (QueryUTxO . QueryUTxOByTxIn $ Set.fromList txinsc)
+          utxoQuery = QueryInEra eInMode $ QueryInShelleyBasedEra sbe
                         (QueryUTxO . QueryUTxOByTxIn $ Set.fromList onlyInputs)
-      let pParamsQuery = QueryInEra eInMode $ QueryInShelleyBasedEra sbe QueryProtocolParameters
+          pParamsQuery = QueryInEra eInMode $ QueryInShelleyBasedEra sbe QueryProtocolParameters
+
+      if null txinsc
+      then return ()
+      else do
+        collateralUtxo <- executeQuery era cModeParams localConnInfo collateralUTxOQuery
+        txinsExist txinsc collateralUtxo
+        notScriptLockedTxIns collateralUtxo
+
       utxo <- executeQuery era cModeParams localConnInfo utxoQuery
+      txinsExist onlyInputs utxo
+
       pparams <- executeQuery era cModeParams localConnInfo pParamsQuery
       (eraHistory, systemStart) <- firstExceptT ShelleyTxCmdAcquireFailure
                                      $ newExceptT $ queryEraHistoryAndSystemStart localNodeConnInfo Nothing
@@ -468,6 +492,24 @@ runTxBuild (AnyCardanoEra era) (AnyConsensusModeParams cModeParams) networkId mS
     (CardanoMode, LegacyByronEra) -> left ShelleyTxCmdByronEra
 
     (wrongMode, _) -> left (ShelleyTxCmdUnsupportedMode (AnyConsensusMode wrongMode))
+ where
+  txinsExist :: [TxIn] -> UTxO era -> ExceptT ShelleyTxCmdError IO ()
+  txinsExist ins (UTxO utxo)
+    | null utxo = left $ ShelleyTxCmdTxInsDoNotExist ins
+    | otherwise = do
+        let utxoIns = Map.keys utxo
+            occursInUtxo = [ txin | txin <- ins, txin `elem` utxoIns ]
+        if length occursInUtxo == length ins
+        then return ()
+        else left . ShelleyTxCmdTxInsDoNotExist $ ins \\ ins `intersect` occursInUtxo
+
+  notScriptLockedTxIns :: UTxO era -> ExceptT ShelleyTxCmdError IO ()
+  notScriptLockedTxIns (UTxO utxo) = do
+    let scriptLockedTxIns =
+          filter (\(_, TxOut aInEra _ _) -> not $ isKeyAddress aInEra ) $ Map.assocs utxo
+    if null scriptLockedTxIns
+    then return ()
+    else left . ShelleyTxCmdExpectedKeyLockedTxIn $ map fst scriptLockedTxIns
 
 queryEraHistoryAndSystemStart
   :: LocalNodeConnectInfo CardanoMode