diff --git a/app/services/projects/create_service.rb b/app/services/projects/create_service.rb
index d4a5b979f63..a02a9052fb2 100644
--- a/app/services/projects/create_service.rb
+++ b/app/services/projects/create_service.rb
@@ -46,6 +46,9 @@ module Projects
 
       yield(@project) if block_given?
 
+      # If the block added errors, don't try to save the project
+      return @project if @project.errors.any?
+
       @project.creator = current_user
 
       if forked_from_project_id
diff --git a/app/services/projects/update_service.rb b/app/services/projects/update_service.rb
index 0d1e2e758cd..d8250cd8102 100644
--- a/app/services/projects/update_service.rb
+++ b/app/services/projects/update_service.rb
@@ -19,6 +19,9 @@ module Projects
 
       yield if block_given?
 
+      # If the block added errors, don't try to save the project
+      return validation_failed! if project.errors.any?
+
       if project.update_attributes(params.except(:default_branch))
         if project.previous_changes.include?('path')
           project.rename_repo
@@ -30,10 +33,7 @@ module Projects
 
         success
       else
-        model_errors = project.errors.full_messages.to_sentence
-        error_message = model_errors.presence || 'Project could not be updated!'
-
-        error(error_message)
+        validation_failed!
       end
     end
 
@@ -45,6 +45,13 @@ module Projects
 
     private
 
+    def validation_failed!
+      model_errors = project.errors.full_messages.to_sentence
+      error_message = model_errors.presence || 'Project could not be updated!'
+
+      error(error_message)
+    end
+
     def renaming_project_with_container_registry_tags?
       new_path = params[:path]
 
diff --git a/spec/requests/api/settings_spec.rb b/spec/requests/api/settings_spec.rb
index aead8978dd4..57adc3ca7a6 100644
--- a/spec/requests/api/settings_spec.rb
+++ b/spec/requests/api/settings_spec.rb
@@ -35,7 +35,9 @@ describe API::Settings, 'Settings' do
 
     context "custom repository storage type set in the config" do
       before do
-        storages = { 'custom' => 'tmp/tests/custom_repositories' }
+        # Add a possible storage to the config
+        storages = Gitlab.config.repositories.storages
+                     .merge({ 'custom' => 'tmp/tests/custom_repositories' })
         allow(Gitlab.config.repositories).to receive(:storages).and_return(storages)
       end