diff --git a/filesystem/Folder.php b/filesystem/Folder.php
index 3b2dac629..3b8a8e04d 100755
--- a/filesystem/Folder.php
+++ b/filesystem/Folder.php
@@ -61,7 +61,8 @@ class Folder extends File {
 	 * Find the given folder or create it both as {@link Folder} database records
 	 * and on the filesystem. If necessary, creates parent folders as well.
 	 * 
-	 * @param $folderPath string Absolute or relative path to the file
+	 * @param $folderPath string Absolute or relative path to the file.
+	 *  If path is relative, its interpreted relative to the "assets/" directory.
 	 * @return Folder
 	 */
 	static function findOrMake($folderPath) {
@@ -74,10 +75,9 @@ class Folder extends File {
 		$parts = explode("/",$folderPath);
 
 		$parentID = 0;
-
+		$item = null;
 		foreach($parts as $part) {
 			if(!$part) continue; // happens for paths with a trailing slash
-			
 			$item = DataObject::get_one("Folder", "\"Name\" = '$part' AND \"ParentID\" = $parentID");
 			if(!$item) {
 				$item = new Folder();
@@ -91,6 +91,7 @@ class Folder extends File {
 			}
 			$parentID = $item->ID;
 		}
+
 		return $item;
 	}
 	
diff --git a/tests/filesystem/FolderTest.php b/tests/filesystem/FolderTest.php
index b08012ca9..a1b03243d 100644
--- a/tests/filesystem/FolderTest.php
+++ b/tests/filesystem/FolderTest.php
@@ -43,11 +43,17 @@ class FolderTest extends SapphireTest {
 		$this->assertNotNull($parentFolder);
 		$this->assertEquals($parentFolder->ID, $folder->ParentID);
 		
-		$path = '/FolderTest/testFindOrMake';
+		$path = '/FolderTest/testFindOrMake'; // no trailing slash
 		$folder = Folder::findOrMake($path);
 		$this->assertEquals(ASSETS_DIR . $path . '/',$folder->getRelativePath(),
 			'Path information is correctly saved to database (without trailing slash)'
 		);
+		
+		$path = '/assets/'; // relative to "assets/" folder, should produce "assets/assets/"
+		$folder = Folder::findOrMake($path);
+		$this->assertEquals(ASSETS_DIR . $path,$folder->getRelativePath(),
+			'A folder named "assets/" within "assets/" is allowed'
+		);
 	}
 	
 	/**