diff --git a/app/models/project.rb b/app/models/project.rb
index acc1b8d2..ce429bc3 100644
--- a/app/models/project.rb
+++ b/app/models/project.rb
@@ -155,7 +155,7 @@ class Project < ActiveRecord::Base
 
   def check_limit
     unless creator.can_create_project?
-      errors[:base] << ("Your own projects limit is #{creator.projects_limit}! Please contact administrator to increase it")
+      errors[:limit_reached] << ("Your own projects limit is #{creator.projects_limit}! Please contact administrator to increase it")
     end
   rescue
     errors[:base] << ("Can't check your ability to create project")
diff --git a/lib/api/projects.rb b/lib/api/projects.rb
index ecd3401f..87653f04 100644
--- a/lib/api/projects.rb
+++ b/lib/api/projects.rb
@@ -58,6 +58,9 @@ module Gitlab
         if @project.saved?
           present @project, with: Entities::Project
         else
+          if @project.errors[:limit_reached].present?
+            error!(@project.errors[:limit_reached], 403)
+          end
           not_found!
         end
       end
diff --git a/spec/requests/api/projects_spec.rb b/spec/requests/api/projects_spec.rb
index de1b1b09..b6353078 100644
--- a/spec/requests/api/projects_spec.rb
+++ b/spec/requests/api/projects_spec.rb
@@ -41,6 +41,11 @@ describe Gitlab::API do
       expect { post api("/projects", user) }.to_not change {Project.count}
     end
 
+    it "should return a 400 error if name not given" do
+      post api("/projects", user)
+      response.status.should == 400
+    end
+
     it "should respond with 201 on success" do
       post api("/projects", user), name: 'foo'
       response.status.should == 201
@@ -51,6 +56,14 @@ describe Gitlab::API do
       response.status.should == 400
     end
 
+    it "should return a 403 error if project limit reached" do
+      (1..user.projects_limit).each do |p|
+        post api("/projects", user), name: "foo#{p}"
+      end
+      post api("/projects", user), name: 'bar'
+      response.status.should == 403
+    end
+
     it "should assign attributes to project" do
       project = attributes_for(:project, {
         description: Faker::Lorem.sentence,