Suppose I have packages A-1.0, A-1.1, and B-1.0 built against A-1.0, and A (both versions) defines a type T which B defines to be an instance of some class C. If I load A-1.1 and B-1.0 into ghci and try to use the C T instance I will get a "No instance for C T" error, because T refers to A-1.1:T and B only defines an instance for A-1.0:T. However, if I don't realize this is what's going on, the error will be quite confusing as B appears to define an instance C T.

Or, A could define the class C, rather than the type T, with the same result.

This is quite common nowadays because there is a newer version of transformers (0.4.1.0) than the one which ships with GHC (0.3.0.0) and it's easy to end up installing mtl or lens against 0.3.0.0, and then some other package which pulls in 0.4.1.0.

It would be nice to give a hint about what is going on, like

No instance for (MonadIO X) arising from a use of ‘liftIO’
In the expression: ...
...
Note: there is an instance transformers-0.3.0.0:MonadIO X