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diff --git a/docs/contracts.rst b/docs/contracts.rst
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@@ -1053,6 +1053,19 @@ but they can be used as base contracts::
If a contract inherits from an abstract contract and does not implement all non-implemented functions by overriding, it will itself be abstract.
+Note that an abstract function is different from a :ref:`Function Type <function-types>` even though their syntax looks very similar.
+
+Example of Abstract function (a function declaration)
+::
+
+ function foo(address) external returns (address);
+
+Example of a Function Type (a variable declaration, where the variable is of type ``function``)
+::
+
+ function(address) external returns (address) foo;
+
+
.. index:: ! contract;interface, ! interface contract
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