diff --git a/packages/element/src/binding.ts b/packages/element/src/binding.ts
index c8dd3a4688..87b64c0023 100644
--- a/packages/element/src/binding.ts
+++ b/packages/element/src/binding.ts
@@ -25,6 +25,7 @@ import {
   doBoundsIntersect,
   getCenterForBounds,
   getElementBounds,
+  pointInsideBounds,
 } from "./bounds";
 import {
   getAllHoveredElementAtPoint,
@@ -47,6 +48,7 @@ import {
   isBindableElement,
   isBoundToContainer,
   isElbowArrow,
+  isFrameLikeElement,
   isRectanguloidElement,
   isTextElement,
 } from "./typeChecks";
@@ -553,6 +555,65 @@ export const getBindingStrategyForDraggingBindingElementEndpoints = (
     return { start, end };
   }
 
+  // Handle binding to shapes where the frame cuts out a part of the shape
+  {
+    const globalPoint = LinearElementEditor.getPointGlobalCoordinates(
+      arrow,
+      draggingPoints.get(startDragged ? startIdx : endIdx)!.point,
+      elementsMap,
+    );
+    const hoveredElement = getHoveredElementForBinding(
+      globalPoint,
+      elements,
+      elementsMap,
+    );
+    const intersectionPoint =
+      hoveredElement &&
+      hoveredElement.frameId &&
+      bindPointToSnapToElementOutline(
+        arrow,
+        hoveredElement,
+        startDragged ? "start" : "end",
+        elementsMap,
+        undefined,
+        true,
+      );
+    if (intersectionPoint) {
+      const enclosingFrame = elementsMap.get(hoveredElement.frameId);
+      if (enclosingFrame && isFrameLikeElement(enclosingFrame)) {
+        const enclosingFrameBounds = getElementBounds(
+          enclosingFrame,
+          elementsMap,
+        );
+        if (!pointInsideBounds(intersectionPoint, enclosingFrameBounds)) {
+          if (isElbowArrow(arrow)) {
+            return {
+              start: { mode: startDragged ? null : start.mode },
+              end: { mode: endDragged ? null : end.mode },
+            };
+          }
+
+          return {
+            start: startDragged
+              ? {
+                  mode: "inside",
+                  element: hoveredElement,
+                  focusPoint: globalPoint,
+                }
+              : start,
+            end: endDragged
+              ? {
+                  mode: "inside",
+                  element: hoveredElement,
+                  focusPoint: globalPoint,
+                }
+              : end,
+          };
+        }
+      }
+    }
+  }
+
   // Handle simpler elbow arrow binding
   if (isElbowArrow(arrow)) {
     return bindingStrategyForElbowArrowEndpointDragging(
@@ -901,6 +962,7 @@ export const bindPointToSnapToElementOutline = (
   startOrEnd: "start" | "end",
   elementsMap: ElementsMap,
   customIntersector?: LineSegment<GlobalPoint>,
+  ignoreFrameCutouts?: boolean,
 ): GlobalPoint => {
   const aabb = aabbForElement(bindableElement, elementsMap);
   const localPoint =
@@ -1020,6 +1082,21 @@ export const bindPointToSnapToElementOutline = (
     return edgePoint;
   }
 
+  // Frames can cut out bindables, so ignore the intersection if
+  // it isn't in the frame
+  if (!ignoreFrameCutouts && bindableElement.frameId) {
+    const enclosingFrame = elementsMap.get(bindableElement.frameId);
+    if (enclosingFrame && isFrameLikeElement(enclosingFrame)) {
+      const enclosingFrameBounds = getElementBounds(
+        enclosingFrame,
+        elementsMap,
+      );
+      if (!pointInsideBounds(intersection, enclosingFrameBounds)) {
+        return edgePoint;
+      }
+    }
+  }
+
   return intersection;
 };
 
diff --git a/packages/element/src/collision.ts b/packages/element/src/collision.ts
index a70db89430..17dc9b1987 100644
--- a/packages/element/src/collision.ts
+++ b/packages/element/src/collision.ts
@@ -36,6 +36,7 @@ import {
   getCubicBezierCurveBound,
   getDiamondPoints,
   getElementBounds,
+  pointInsideBounds,
 } from "./bounds";
 import {
   hasBoundTextElement,
@@ -226,6 +227,20 @@ const bindingBorderTest = (
     return false;
   }
 
+  // If the element is inside a frame, we should clip the element
+  if (element.frameId) {
+    const enclosingFrame = elementsMap.get(element.frameId);
+    if (enclosingFrame && isFrameLikeElement(enclosingFrame)) {
+      const enclosingFrameBounds = getElementBounds(
+        enclosingFrame,
+        elementsMap,
+      );
+      if (!pointInsideBounds(p, enclosingFrameBounds)) {
+        return false;
+      }
+    }
+  }
+
   // Do the intersection test against the element since it's close enough
   const intersections = intersectElementWithLineSegment(
     element,
diff --git a/packages/element/src/linearElementEditor.ts b/packages/element/src/linearElementEditor.ts
index 345b7dd71a..394db8670d 100644
--- a/packages/element/src/linearElementEditor.ts
+++ b/packages/element/src/linearElementEditor.ts
@@ -2147,7 +2147,7 @@ const pointDraggingUpdates = (
       ),
     };
 
-    if (endIsDragged) {
+    if (endIsDragged && updates.endBinding.mode === "orbit") {
       updates.suggestedBinding = end.element;
     }
   } else if (endIsDragged) {
diff --git a/packages/excalidraw/renderer/interactiveScene.ts b/packages/excalidraw/renderer/interactiveScene.ts
index 4dfeb81f2b..7404ebacab 100644
--- a/packages/excalidraw/renderer/interactiveScene.ts
+++ b/packages/excalidraw/renderer/interactiveScene.ts
@@ -209,6 +209,35 @@ const renderBindingHighlightForBindableElement = (
   const opacity = clamp((1 / BIND_MODE_TIMEOUT) * remainingTime, 0.0001, 1);
   const offset = element.strokeWidth / 2;
 
+  const enclosingFrame = element.frameId && allElementsMap.get(element.frameId);
+  if (enclosingFrame && isFrameLikeElement(enclosingFrame)) {
+    context.translate(
+      enclosingFrame.x + appState.scrollX,
+      enclosingFrame.y + appState.scrollY,
+    );
+
+    context.beginPath();
+
+    if (FRAME_STYLE.radius && context.roundRect) {
+      context.roundRect(
+        -1,
+        -1,
+        enclosingFrame.width + 1,
+        enclosingFrame.height + 1,
+        FRAME_STYLE.radius / appState.zoom.value,
+      );
+    } else {
+      context.rect(-1, -1, enclosingFrame.width + 1, enclosingFrame.height + 1);
+    }
+
+    context.clip();
+
+    context.translate(
+      -(enclosingFrame.x + appState.scrollX),
+      -(enclosingFrame.y + appState.scrollY),
+    );
+  }
+
   switch (element.type) {
     case "magicframe":
     case "frame":