Parameter inference breaks type intersection

[Ghirigoro]

TypeScript Version: 3.8.3 (also tested with 3.9.0-dev.20200425)

Search Terms:
inference

Code

type Effect<T, M> = {
  // NOTE: The problem seems to be here somewhere. Getting rid of the
  // intersection `& M` below gets rid of the error.
  do?: (o: T & M) => void;
};

type Obj = {};

function create<T, M>(params: {
  methods: M;
  effect: Effect<T, M>;
}): Obj & M {
  return params.methods
}

const obj = create({
  // If the parameter below is inferred then the Obj type
  // breaks and the methods are no longer merged in.
  // If a type is given (e.g. `obj:any`) the methods work
  // as expected
  effect:{do: (obj) => {}},
  methods: {
    something() {}
  }
});

// This will be an error if the effect infers the parameter type
obj.something();

Expected behavior:
Functions in methods should be merged into the type that is output by create or an error should be generated if there is a problem with the types.

Actual behavior:
Function in methods are only merged if do in effects is defined with explicitly typed parameters and no error is generated.

Playground Link: playground

[RyanCavanaugh]

The problem here is that you have no inference site for T, so T gets fixed to unknown, then this ends up with M getting unknown because of inference on the obj parameter. The straightforward fix is to just remove T from these declarations entirely. A more fleshed-out example might be something we could provide a better way to write a declaration for