diff --git a/lib/galaxy/managers/library_datasets.py b/lib/galaxy/managers/library_datasets.py
index 504648e0511..a0a9e8a9a21 100644
--- a/lib/galaxy/managers/library_datasets.py
+++ b/lib/galaxy/managers/library_datasets.py
@@ -135,7 +135,7 @@ class LibraryDatasetsManager(object):
             # all operations are available to an admin
             return ld
         if check_accessible:
-            ld = self._check_accessible(trans, ld)
+            ld = self.check_accessible(trans, ld)
         return ld
 
     def check_accessible(self, trans, ld):
@@ -150,7 +150,7 @@ class LibraryDatasetsManager(object):
 
         :raises:    ObjectNotFound
         """
-        if not trans.app.security_agent.can_access_library_item(trans.get_current_user_roles(), ld):
+        if not trans.app.security_agent.can_access_library_item(trans.get_current_user_roles(), ld, trans.user):
             raise ObjectNotFound('Library dataset with the id provided was not found.')
         elif ld.deleted:
             raise ObjectNotFound('Library dataset with the id provided is deleted.')
diff --git a/test/api/test_libraries.py b/test/api/test_libraries.py
index d82ce93a007..b89019d106b 100644
--- a/test/api/test_libraries.py
+++ b/test/api/test_libraries.py
@@ -113,6 +113,34 @@ class LibrariesApiTestCase(api.ApiTestCase, TestsDatasets):
         self._assert_status_code_is(create_response, 200)
         self._assert_has_keys(create_response.json(), "name", "id")
 
+    def test_update_dataset_in_folder(self):
+        library = self.library_populator.new_private_library("ForUpdateDataset")
+        folder_response = self._create_folder(library)
+        self._assert_status_code_is(folder_response, 200)
+        folder_id = folder_response.json()[0]['id']
+        history_id = self.dataset_populator.new_history()
+        hda_id = self.dataset_populator.new_dataset(history_id, content="1 2 3")['id']
+        payload = {'from_hda_id': hda_id, 'create_type': 'file', 'folder_id': folder_id}
+        ld = self._post("libraries/%s/contents" % folder_id, payload)
+        data = {'name': 'updated_name', 'file_ext': 'fastq', 'misc_info': 'updated_info', 'genome_build': 'updated_genome_build'}
+        create_response = self._patch("libraries/datasets/%s" % ld.json()["id"], data=data)
+        self._assert_status_code_is(create_response, 200)
+        self._assert_has_keys(create_response.json(), "name", "file_ext", "misc_info", "genome_build")
+
+    def test_invalid_update_dataset_in_folder(self):
+        library = self.library_populator.new_private_library("ForInvalidUpdateDataset")
+        folder_response = self._create_folder(library)
+        self._assert_status_code_is(folder_response, 200)
+        folder_id = folder_response.json()[0]['id']
+        history_id = self.dataset_populator.new_history()
+        hda_id = self.dataset_populator.new_dataset(history_id, content="1 2 3")['id']
+        payload = {'from_hda_id': hda_id, 'create_type': 'file', 'folder_id': folder_id}
+        ld = self._post("libraries/%s/contents" % folder_id, payload)
+        data = {'file_ext': 'nonexisting_type'}
+        create_response = self._patch("libraries/datasets/%s" % ld.json()["id"], data=data)
+        self._assert_status_code_is(create_response, 400)
+        assert 'This Galaxy does not recognize the datatype of:' in create_response.json()['err_msg']
+
     def test_create_datasets_in_library_from_collection(self):
         library = self.library_populator.new_private_library("ForCreateDatasetsFromCollection")
         folder_response = self._create_folder(library)