diff --git a/CHANGELOG b/CHANGELOG
index 30552d8bb7..94bcbe648e 100644
--- a/CHANGELOG
+++ b/CHANGELOG
@@ -32,6 +32,8 @@ v2.3.0 (XXXX-XX-XX)
 
 * dynamically create extra dispatcher threads if required
 
+* fixed issue #1097: schemas in the API docs no longer show required properties as optional
+
 
 v2.3.0-beta2 (2014-11-08)
 -------------------------
diff --git a/js/server/modules/org/arangodb/foxx/model.js b/js/server/modules/org/arangodb/foxx/model.js
index 079b398929..703eba25fd 100644
--- a/js/server/modules/org/arangodb/foxx/model.js
+++ b/js/server/modules/org/arangodb/foxx/model.js
@@ -161,39 +161,43 @@ _.extend(Model, {
     if (this.prototype.schema) {
       _.each(this.prototype.schema, function (schema, attributeName) {
         var description = schema.describe(),
-          type = description.type,
+          jsonSchema = {type: description.type},
           rules = description.rules,
           flags = description.flags;
 
         if (flags && flags.presence === 'required') {
+          jsonSchema.required = true;
           required.push(attributeName);
         }
 
         if (
-          type === 'number' &&
+          jsonSchema.type === 'number' &&
             _.isArray(rules) &&
             _.some(rules, function (rule) {
               return rule.name === 'integer';
             })
         ) {
-          type = 'integer';
+          jsonSchema.type = 'integer';
         }
 
-        properties[attributeName] = {type: type};
+        properties[attributeName] = jsonSchema;
       });
     } else {
       // deprecated
       _.each(this.attributes, function (attribute, attributeName) {
+        var jsonSchema = {};
         if (typeof attribute === 'string') {
-          properties[attributeName] = {type: attribute};
+           jsonSchema.type = attribute;
         } else if (attribute) {
           if (typeof attribute.type === 'string') {
-            properties[attributeName] = {type: attribute.type};
+            jsonSchema.type = attribute.type;
           }
           if (attribute.required) {
             required.push(attributeName);
+            jsonSchema.required = true;
           }
         }
+        properties[attributeName] = jsonSchema;
       });
     }
 
diff --git a/js/server/tests/shell-transactions-noncluster.js b/js/server/tests/shell-transactions-noncluster.js
index 1359b2ffbd..db1b7a6e70 100644
--- a/js/server/tests/shell-transactions-noncluster.js
+++ b/js/server/tests/shell-transactions-noncluster.js
@@ -255,6 +255,27 @@ function transactionInvocationSuite () {
       }
     },
 
+////////////////////////////////////////////////////////////////////////////////
+/// @brief test: nesting
+////////////////////////////////////////////////////////////////////////////////
+
+    testNestingEmbedFlag : function () {
+      var obj = {
+        collections : {
+        },
+        action : function () {
+          return 19 + TRANSACTION({
+            collections: {
+            },
+            embed: true,
+            action: "function () { return 23; }"
+          });
+        }
+      };
+
+      assertEqual(42, TRANSACTION(obj));
+    },
+
 ////////////////////////////////////////////////////////////////////////////////
 /// @brief test: params
 ////////////////////////////////////////////////////////////////////////////////