diff --git a/core/src/main/java/com/google/bitcoin/protocols/channels/PaymentChannelClient.java b/core/src/main/java/com/google/bitcoin/protocols/channels/PaymentChannelClient.java
index a76a53f2..382aec78 100644
--- a/core/src/main/java/com/google/bitcoin/protocols/channels/PaymentChannelClient.java
+++ b/core/src/main/java/com/google/bitcoin/protocols/channels/PaymentChannelClient.java
@@ -1,9 +1,7 @@
 package com.google.bitcoin.protocols.channels;
 
-import java.math.BigInteger;
-import java.util.concurrent.locks.ReentrantLock;
-
 import com.google.bitcoin.core.*;
+import com.google.bitcoin.protocols.channels.PaymentChannelCloseException.CloseReason;
 import com.google.bitcoin.utils.Threading;
 import com.google.common.annotations.VisibleForTesting;
 import com.google.protobuf.ByteString;
@@ -11,7 +9,9 @@ import net.jcip.annotations.GuardedBy;
 import org.bitcoin.paymentchannel.Protos;
 import org.slf4j.LoggerFactory;
 
-import com.google.bitcoin.protocols.channels.PaymentChannelCloseException.CloseReason;
+import java.math.BigInteger;
+import java.util.concurrent.locks.ReentrantLock;
+
 import static com.google.common.base.Preconditions.checkNotNull;
 import static com.google.common.base.Preconditions.checkState;
 
@@ -138,13 +138,12 @@ public class PaymentChannelClient {
     }
 
     @GuardedBy("lock")
-    private void receiveInitiate(Protos.Initiate initiate, BigInteger minChannelSize) throws VerificationException, ValueOutOfRangeException {
+    private void receiveInitiate(Protos.Initiate initiate, BigInteger contractValue) throws VerificationException, ValueOutOfRangeException {
         log.info("Got INITIATE message, providing refund transaction");
 
         state = new PaymentChannelClientState(wallet, myKey,
                 new ECKey(null, initiate.getMultisigKey().toByteArray()),
-                minChannelSize,
-                initiate.getExpireTimeSecs());
+                contractValue, initiate.getExpireTimeSecs());
         state.initiate();
         step = InitStep.WAITING_FOR_REFUND_RETURN;
 
@@ -232,14 +231,14 @@ public class PaymentChannelClient {
                         }
 
                         BigInteger minChannelSize = BigInteger.valueOf(initiate.getMinAcceptedChannelSize());
-                        if (minChannelSize.compareTo(maxValue) > 0) {
+                        if (maxValue.compareTo(minChannelSize) < 0) {
                             errorBuilder = Protos.Error.newBuilder()
                                     .setCode(Protos.Error.ErrorCode.CHANNEL_VALUE_TOO_LARGE);
                             closeReason = CloseReason.SERVER_REQUESTED_TOO_MUCH_VALUE;
                             break;
                         }
 
-                        receiveInitiate(initiate, minChannelSize);
+                        receiveInitiate(initiate, maxValue);
                         return;
                     case RETURN_REFUND:
                         receiveRefund(msg);
diff --git a/core/src/test/java/com/google/bitcoin/protocols/channels/ChannelConnectionTest.java b/core/src/test/java/com/google/bitcoin/protocols/channels/ChannelConnectionTest.java
index 471e287c..ec3beaa6 100644
--- a/core/src/test/java/com/google/bitcoin/protocols/channels/ChannelConnectionTest.java
+++ b/core/src/test/java/com/google/bitcoin/protocols/channels/ChannelConnectionTest.java
@@ -473,7 +473,7 @@ public class ChannelConnectionTest extends TestWithWallet {
     }
 
     @Test
-    public void testClientValueTooLarge() throws Exception {
+    public void testValuesAreRespected() throws Exception {
         ChannelTestUtils.RecordingPair pair = ChannelTestUtils.makeRecorders(serverWallet, mockBroadcaster);
         PaymentChannelServer server = pair.server;
         PaymentChannelClient client = new PaymentChannelClient(wallet, myKey, Utils.COIN, Sha256Hash.ZERO_HASH, pair.clientRecorder);
@@ -493,6 +493,27 @@ public class ChannelConnectionTest extends TestWithWallet {
             client.incrementPayment(BigInteger.ONE);
             fail();
         } catch (IllegalStateException e) { }
+
+        // Now check that if the server has a lower min size than what we are willing to spend, we do actually open
+        // a channel of that size.
+        sendMoneyToWallet(Utils.COIN.multiply(BigInteger.TEN), AbstractBlockChain.NewBlockType.BEST_CHAIN);
+
+        pair = ChannelTestUtils.makeRecorders(serverWallet, mockBroadcaster);
+        server = pair.server;
+        final BigInteger myValue = Utils.COIN.multiply(BigInteger.TEN);
+        client = new PaymentChannelClient(wallet, myKey, myValue, Sha256Hash.ZERO_HASH, pair.clientRecorder);
+        client.connectionOpen();
+        server.connectionOpen();
+        server.receiveMessage(pair.clientRecorder.checkNextMsg(MessageType.CLIENT_VERSION));
+        client.receiveMessage(pair.serverRecorder.checkNextMsg(MessageType.SERVER_VERSION));
+        client.receiveMessage(Protos.TwoWayChannelMessage.newBuilder()
+                .setInitiate(Protos.Initiate.newBuilder().setExpireTimeSecs(Utils.now().getTime() / 1000)
+                        .setMinAcceptedChannelSize(Utils.COIN.add(BigInteger.ONE).longValue())
+                        .setMultisigKey(ByteString.copyFrom(new ECKey().getPubKey())))
+                .setType(MessageType.INITIATE).build());
+        final Protos.TwoWayChannelMessage provideRefund = pair.clientRecorder.checkNextMsg(MessageType.PROVIDE_REFUND);
+        Transaction refund = new Transaction(params, provideRefund.getProvideRefund().getTx().toByteArray());
+        assertEquals(myValue, refund.getOutput(0).getValue());
     }
 
     @Test