diff --git a/tests/functional/dependencies/test_simple_dependency.py b/tests/functional/dependencies/test_simple_dependency.py
index 0a98c3d1a78..0c91c24e7d2 100644
--- a/tests/functional/dependencies/test_simple_dependency.py
+++ b/tests/functional/dependencies/test_simple_dependency.py
@@ -4,9 +4,11 @@
 
 from pathlib import Path
 
+from dbt.exceptions import DbtProjectError
 from dbt.tests.util import (
     check_relations_equal,
     run_dbt,
+    write_config_file,
 )
 
 
@@ -392,5 +394,32 @@ def packages(self):
             ]
         }
 
-    def test_deps_tarball(self, project):
+    def test_deps_simple_tarball_doesnt_error_out(self, project):
         run_dbt(["deps"])
+        assert len(os.listdir("dbt_packages")) == 1
+
+
+class TestBadTarballDependency(object):
+    @pytest.fixture(scope="class", autouse=True)
+    def setUp(self, project):
+        project.run_sql_file(project.test_data_dir / Path("seed.sql"))
+
+    def test_malformed_tarball_package_causes_exception(self, project):
+        # We have to specify the bad formatted package here because if we do it
+        # in a `packages` fixture, the test will blow up in the setup phase, meaning
+        # we can't appropriately catch it with a `pytest.raises`
+        bad_tarball_package_spec = {
+            "packages": [
+                {
+                    "tarball": "https://codeload.github.com/dbt-labs/dbt-utils/tar.gz/0.9.6",
+                    "version": "dbt_utils",
+                }
+            ]
+        }
+        write_config_file(bad_tarball_package_spec, "packages.yml")
+
+        with pytest.raises(
+            DbtProjectError, match=r"The packages.yml file in this project is malformed"
+        ) as e:
+            run_dbt(["deps"])
+            assert e is not None