diff --git a/.release-please-manifest.json b/.release-please-manifest.json
index 4b272115e4..2b233c7b0d 100644
--- a/.release-please-manifest.json
+++ b/.release-please-manifest.json
@@ -1,3 +1,3 @@
 {
-  ".": "1.40.1"
+  ".": "1.40.2"
 }
\ No newline at end of file
diff --git a/.stats.yml b/.stats.yml
index ac652c9271..cad2c64cd0 100644
--- a/.stats.yml
+++ b/.stats.yml
@@ -1,2 +1,2 @@
 configured_endpoints: 68
-openapi_spec_url: https://storage.googleapis.com/stainless-sdk-openapi-specs/openai-4097c2f86beb3f3bb021775cd1dfa240e960caf842aeefc2e08da4dc0851ea79.yml
+openapi_spec_url: https://storage.googleapis.com/stainless-sdk-openapi-specs/openai-97797a9363b9960b5f2fbdc84426a2b91e75533ecd409fe99e37c231180a4339.yml
diff --git a/CHANGELOG.md b/CHANGELOG.md
index 95b51e8a03..a6c65f0eb2 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -1,5 +1,20 @@
 # Changelog
 
+## 1.40.2 (2024-08-08)
+
+Full Changelog: [v1.40.1...v1.40.2](https://github.com/openai/openai-python/compare/v1.40.1...v1.40.2)
+
+### Bug Fixes
+
+* **client:** raise helpful error message for response_format misuse ([18191da](https://github.com/openai/openai-python/commit/18191dac8e1437a0f708525d474b7ecfe459d966))
+* **json schema:** support recursive BaseModels in Pydantic v1 ([#1623](https://github.com/openai/openai-python/issues/1623)) ([43e10c0](https://github.com/openai/openai-python/commit/43e10c0f251a42f1e6497f360c6c23d3058b3da3))
+
+
+### Chores
+
+* **internal:** format some docstrings ([d34a081](https://github.com/openai/openai-python/commit/d34a081c30f869646145919b2256ded115241eb5))
+* **internal:** updates ([#1624](https://github.com/openai/openai-python/issues/1624)) ([598e7a2](https://github.com/openai/openai-python/commit/598e7a23768e7addbe1319ada2e87caee3cf0d14))
+
 ## 1.40.1 (2024-08-07)
 
 Full Changelog: [v1.40.0...v1.40.1](https://github.com/openai/openai-python/compare/v1.40.0...v1.40.1)
diff --git a/pyproject.toml b/pyproject.toml
index af661cbad7..9600130ca3 100644
--- a/pyproject.toml
+++ b/pyproject.toml
@@ -1,6 +1,6 @@
 [project]
 name = "openai"
-version = "1.40.1"
+version = "1.40.2"
 description = "The official Python library for the openai API"
 dynamic = ["readme"]
 license = "Apache-2.0"
@@ -202,7 +202,6 @@ unfixable = [
   "T201",
   "T203",
 ]
-ignore-init-module-imports = true
 
 [tool.ruff.lint.flake8-tidy-imports.banned-api]
 "functools.lru_cache".msg = "This function does not retain type information for the wrapped function's arguments; The `lru_cache` function from `_utils` should be used instead"
@@ -214,7 +213,7 @@ combine-as-imports = true
 extra-standard-library = ["typing_extensions"]
 known-first-party = ["openai", "tests"]
 
-[tool.ruff.per-file-ignores]
+[tool.ruff.lint.per-file-ignores]
 "bin/**.py" = ["T201", "T203"]
 "scripts/**.py" = ["T201", "T203"]
 "tests/**.py" = ["T201", "T203"]
diff --git a/src/openai/_version.py b/src/openai/_version.py
index f88b8dead1..7e6783b6c6 100644
--- a/src/openai/_version.py
+++ b/src/openai/_version.py
@@ -1,4 +1,4 @@
 # File generated from our OpenAPI spec by Stainless. See CONTRIBUTING.md for details.
 
 __title__ = "openai"
-__version__ = "1.40.1"  # x-release-please-version
+__version__ = "1.40.2"  # x-release-please-version
diff --git a/src/openai/lib/_pydantic.py b/src/openai/lib/_pydantic.py
index 967ad5de57..a90effdf1a 100644
--- a/src/openai/lib/_pydantic.py
+++ b/src/openai/lib/_pydantic.py
@@ -62,6 +62,11 @@ def _ensure_strict_json_schema(
         for def_name, def_schema in defs.items():
             _ensure_strict_json_schema(def_schema, path=(*path, "$defs", def_name))
 
+    definitions = json_schema.get("definitions")
+    if is_dict(definitions):
+        for definition_name, definition_schema in definitions.items():
+            _ensure_strict_json_schema(definition_schema, path=(*path, "definitions", definition_name))
+
     return json_schema
 
 
diff --git a/src/openai/resources/beta/chat/completions.py b/src/openai/resources/beta/chat/completions.py
index 88ea2c0572..aee88c3c0f 100644
--- a/src/openai/resources/beta/chat/completions.py
+++ b/src/openai/resources/beta/chat/completions.py
@@ -78,14 +78,17 @@ def parse(
         from pydantic import BaseModel
         from openai import OpenAI
 
+
         class Step(BaseModel):
             explanation: str
             output: str
 
+
         class MathResponse(BaseModel):
             steps: List[Step]
             final_answer: str
 
+
         client = OpenAI()
         completion = client.beta.chat.completions.parse(
             model="gpt-4o-2024-08-06",
@@ -184,12 +187,12 @@ def stream(
 
         ```py
         with client.beta.chat.completions.stream(
-            model='gpt-4o-2024-08-06',
+            model="gpt-4o-2024-08-06",
             messages=[...],
         ) as stream:
             for event in stream:
-                if event.type == 'content.delta':
-                    print(event.content, flush=True, end='')
+                if event.type == "content.delta":
+                    print(event.content, flush=True, end="")
         ```
 
         When the context manager is entered, a `ChatCompletionStream` instance is returned which, like `.create(stream=True)` is an iterator. The full list of events that are yielded by the iterator are outlined in [these docs](https://github.com/openai/openai-python/blob/main/helpers.md#chat-completions-events).
@@ -287,14 +290,17 @@ async def parse(
         from pydantic import BaseModel
         from openai import AsyncOpenAI
 
+
         class Step(BaseModel):
             explanation: str
             output: str
 
+
         class MathResponse(BaseModel):
             steps: List[Step]
             final_answer: str
 
+
         client = AsyncOpenAI()
         completion = await client.beta.chat.completions.parse(
             model="gpt-4o-2024-08-06",
@@ -393,12 +399,12 @@ def stream(
 
         ```py
         async with client.beta.chat.completions.stream(
-            model='gpt-4o-2024-08-06',
+            model="gpt-4o-2024-08-06",
             messages=[...],
         ) as stream:
             async for event in stream:
-                if event.type == 'content.delta':
-                    print(event.content, flush=True, end='')
+                if event.type == "content.delta":
+                    print(event.content, flush=True, end="")
         ```
 
         When the context manager is entered, an `AsyncChatCompletionStream` instance is returned which, like `.create(stream=True)` is an async iterator. The full list of events that are yielded by the iterator are outlined in [these docs](https://github.com/openai/openai-python/blob/main/helpers.md#chat-completions-events).
diff --git a/src/openai/resources/chat/completions.py b/src/openai/resources/chat/completions.py
index 3dcd3774d7..dc577d6251 100644
--- a/src/openai/resources/chat/completions.py
+++ b/src/openai/resources/chat/completions.py
@@ -2,10 +2,12 @@
 
 from __future__ import annotations
 
+import inspect
 from typing import Dict, List, Union, Iterable, Optional, overload
 from typing_extensions import Literal
 
 import httpx
+import pydantic
 
 from ... import _legacy_response
 from ..._types import NOT_GIVEN, Body, Query, Headers, NotGiven
@@ -147,6 +149,11 @@ def create(
               [GPT-4 Turbo](https://platform.openai.com/docs/models/gpt-4-and-gpt-4-turbo) and
               all GPT-3.5 Turbo models newer than `gpt-3.5-turbo-1106`.
 
+              Setting to `{ "type": "json_schema", "json_schema": {...} }` enables Structured
+              Outputs which guarantees the model will match your supplied JSON schema. Learn
+              more in the
+              [Structured Outputs guide](https://platform.openai.com/docs/guides/structured-outputs).
+
               Setting to `{ "type": "json_object" }` enables JSON mode, which guarantees the
               message the model generates is valid JSON.
 
@@ -345,6 +352,11 @@ def create(
               [GPT-4 Turbo](https://platform.openai.com/docs/models/gpt-4-and-gpt-4-turbo) and
               all GPT-3.5 Turbo models newer than `gpt-3.5-turbo-1106`.
 
+              Setting to `{ "type": "json_schema", "json_schema": {...} }` enables Structured
+              Outputs which guarantees the model will match your supplied JSON schema. Learn
+              more in the
+              [Structured Outputs guide](https://platform.openai.com/docs/guides/structured-outputs).
+
               Setting to `{ "type": "json_object" }` enables JSON mode, which guarantees the
               message the model generates is valid JSON.
 
@@ -536,6 +548,11 @@ def create(
               [GPT-4 Turbo](https://platform.openai.com/docs/models/gpt-4-and-gpt-4-turbo) and
               all GPT-3.5 Turbo models newer than `gpt-3.5-turbo-1106`.
 
+              Setting to `{ "type": "json_schema", "json_schema": {...} }` enables Structured
+              Outputs which guarantees the model will match your supplied JSON schema. Learn
+              more in the
+              [Structured Outputs guide](https://platform.openai.com/docs/guides/structured-outputs).
+
               Setting to `{ "type": "json_object" }` enables JSON mode, which guarantees the
               message the model generates is valid JSON.
 
@@ -647,6 +664,7 @@ def create(
         extra_body: Body | None = None,
         timeout: float | httpx.Timeout | None | NotGiven = NOT_GIVEN,
     ) -> ChatCompletion | Stream[ChatCompletionChunk]:
+        validate_response_format(response_format)
         return self._post(
             "/chat/completions",
             body=maybe_transform(
@@ -802,6 +820,11 @@ async def create(
               [GPT-4 Turbo](https://platform.openai.com/docs/models/gpt-4-and-gpt-4-turbo) and
               all GPT-3.5 Turbo models newer than `gpt-3.5-turbo-1106`.
 
+              Setting to `{ "type": "json_schema", "json_schema": {...} }` enables Structured
+              Outputs which guarantees the model will match your supplied JSON schema. Learn
+              more in the
+              [Structured Outputs guide](https://platform.openai.com/docs/guides/structured-outputs).
+
               Setting to `{ "type": "json_object" }` enables JSON mode, which guarantees the
               message the model generates is valid JSON.
 
@@ -1000,6 +1023,11 @@ async def create(
               [GPT-4 Turbo](https://platform.openai.com/docs/models/gpt-4-and-gpt-4-turbo) and
               all GPT-3.5 Turbo models newer than `gpt-3.5-turbo-1106`.
 
+              Setting to `{ "type": "json_schema", "json_schema": {...} }` enables Structured
+              Outputs which guarantees the model will match your supplied JSON schema. Learn
+              more in the
+              [Structured Outputs guide](https://platform.openai.com/docs/guides/structured-outputs).
+
               Setting to `{ "type": "json_object" }` enables JSON mode, which guarantees the
               message the model generates is valid JSON.
 
@@ -1191,6 +1219,11 @@ async def create(
               [GPT-4 Turbo](https://platform.openai.com/docs/models/gpt-4-and-gpt-4-turbo) and
               all GPT-3.5 Turbo models newer than `gpt-3.5-turbo-1106`.
 
+              Setting to `{ "type": "json_schema", "json_schema": {...} }` enables Structured
+              Outputs which guarantees the model will match your supplied JSON schema. Learn
+              more in the
+              [Structured Outputs guide](https://platform.openai.com/docs/guides/structured-outputs).
+
               Setting to `{ "type": "json_object" }` enables JSON mode, which guarantees the
               message the model generates is valid JSON.
 
@@ -1302,6 +1335,7 @@ async def create(
         extra_body: Body | None = None,
         timeout: float | httpx.Timeout | None | NotGiven = NOT_GIVEN,
     ) -> ChatCompletion | AsyncStream[ChatCompletionChunk]:
+        validate_response_format(response_format)
         return await self._post(
             "/chat/completions",
             body=await async_maybe_transform(
@@ -1375,3 +1409,10 @@ def __init__(self, completions: AsyncCompletions) -> None:
         self.create = async_to_streamed_response_wrapper(
             completions.create,
         )
+
+
+def validate_response_format(response_format: object) -> None:
+    if inspect.isclass(response_format) and issubclass(response_format, pydantic.BaseModel):
+        raise TypeError(
+            "You tried to pass a `BaseModel` class to `chat.completions.create()`; You must use `beta.chat.completions.parse()` instead"
+        )
diff --git a/src/openai/types/chat/completion_create_params.py b/src/openai/types/chat/completion_create_params.py
index bf648a3858..61126b37ac 100644
--- a/src/openai/types/chat/completion_create_params.py
+++ b/src/openai/types/chat/completion_create_params.py
@@ -126,6 +126,11 @@ class CompletionCreateParamsBase(TypedDict, total=False):
     [GPT-4 Turbo](https://platform.openai.com/docs/models/gpt-4-and-gpt-4-turbo) and
     all GPT-3.5 Turbo models newer than `gpt-3.5-turbo-1106`.
 
+    Setting to `{ "type": "json_schema", "json_schema": {...} }` enables Structured
+    Outputs which guarantees the model will match your supplied JSON schema. Learn
+    more in the
+    [Structured Outputs guide](https://platform.openai.com/docs/guides/structured-outputs).
+
     Setting to `{ "type": "json_object" }` enables JSON mode, which guarantees the
     message the model generates is valid JSON.
 
diff --git a/src/openai/types/chat_model.py b/src/openai/types/chat_model.py
index 686f26b783..09bc081f7a 100644
--- a/src/openai/types/chat_model.py
+++ b/src/openai/types/chat_model.py
@@ -6,8 +6,8 @@
 
 ChatModel: TypeAlias = Literal[
     "gpt-4o",
-    "gpt-4o-2024-08-06",
     "gpt-4o-2024-05-13",
+    "gpt-4o-2024-08-06",
     "gpt-4o-mini",
     "gpt-4o-mini-2024-07-18",
     "gpt-4-turbo",
diff --git a/tests/api_resources/chat/test_completions.py b/tests/api_resources/chat/test_completions.py
index d744dfe6ea..9fa3cc8284 100644
--- a/tests/api_resources/chat/test_completions.py
+++ b/tests/api_resources/chat/test_completions.py
@@ -6,6 +6,7 @@
 from typing import Any, cast
 
 import pytest
+import pydantic
 
 from openai import OpenAI, AsyncOpenAI
 from tests.utils import assert_matches_type
@@ -257,6 +258,23 @@ def test_streaming_response_create_overload_2(self, client: OpenAI) -> None:
 
         assert cast(Any, response.is_closed) is True
 
+    @parametrize
+    def test_method_create_disallows_pydantic(self, client: OpenAI) -> None:
+        class MyModel(pydantic.BaseModel):
+            a: str
+
+        with pytest.raises(TypeError, match=r"You tried to pass a `BaseModel` class"):
+            client.chat.completions.create(
+                messages=[
+                    {
+                        "content": "string",
+                        "role": "system",
+                    }
+                ],
+                model="gpt-4o",
+                response_format=cast(Any, MyModel),
+            )
+
 
 class TestAsyncCompletions:
     parametrize = pytest.mark.parametrize("async_client", [False, True], indirect=True, ids=["loose", "strict"])
@@ -498,3 +516,20 @@ async def test_streaming_response_create_overload_2(self, async_client: AsyncOpe
             await stream.close()
 
         assert cast(Any, response.is_closed) is True
+
+    @parametrize
+    async def test_method_create_disallows_pydantic(self, async_client: AsyncOpenAI) -> None:
+        class MyModel(pydantic.BaseModel):
+            a: str
+
+        with pytest.raises(TypeError, match=r"You tried to pass a `BaseModel` class"):
+            await async_client.chat.completions.create(
+                messages=[
+                    {
+                        "content": "string",
+                        "role": "system",
+                    }
+                ],
+                model="gpt-4o",
+                response_format=cast(Any, MyModel),
+            )
diff --git a/tests/lib/test_pydantic.py b/tests/lib/test_pydantic.py
index dc09596da2..a8fe8f4570 100644
--- a/tests/lib/test_pydantic.py
+++ b/tests/lib/test_pydantic.py
@@ -130,6 +130,7 @@ def test_most_types() -> None:
                             "type": "object",
                             "properties": {"column_name": {"title": "Column Name", "type": "string"}},
                             "required": ["column_name"],
+                            "additionalProperties": False,
                         },
                         "Condition": {
                             "title": "Condition",
@@ -147,6 +148,7 @@ def test_most_types() -> None:
                                 },
                             },
                             "required": ["column", "operator", "value"],
+                            "additionalProperties": False,
                         },
                         "OrderBy": {
                             "title": "OrderBy",