favorite.rb

class Favorite < ActiveRecord::Base
  # Uses composite_primary_keys gem: http://compositekeys.rubyforge.org/
  set_primary_keys :user_id, :location_id
  belongs_to :user
  belongs_to :location
  validates_uniqueness_of :user_id, :scope => :location_id
end

favorites_controller.rb

class FavoritesController < ApplicationController

  # ...

  def create
    favorite = Location.find(params[:location_id])
    @user.favorites << favorite
    if @user.save
      flash[:notice] = "Successfully created favorite."
      respond_to do |format|
        #format.html redirect_to @favorite
        format.xml { render :xml => favorite }
        format.js { render :json => favorite }
      end
    else
      respond_to do |format|
        format.xml  { render :xml => @user.errors, :status => :unprocessable_entity }
        format.js  { render :json => @user.errors, :status => :unprocessable_entity }
      end
    end
  end

  # ...
end

favorites_controller_spec.rb

require File.dirname(__FILE__) + '/../spec_helper'

describe FavoritesController do

  integrate_views

  before(:each) do
    @user = Factory.create(:user)
    @location = Factory.create(:location_1)
    @user.favorites << @location
    @user.save!
    controller.stub!(:fetch_user).and_return(@user)
  end

  it "create action should fail when duplicate entries are submitted with JSON request" do
    post :create, :location_id => @location.id, :format => 'js'
    puts ">>> THE FOLLOWING SHOULD FAIL >>>\n"
    puts response.body
    json = ActiveSupport::JSON.decode(response.body)
    json.count.should == 1
    json["location"]["id"].should == location_2.id
    puts "CREATE JSON: \n#{response.body}\n"
  end

end

gistfile4.txt

Notes:
I have a unique composite primary key/index set in MySQL for the fields: user_id and location_id.

I expect an error to be thrown, but I am unable to recover from the following error.  
For some reason it is not validating_uniqueness_of [:user_id, :location_id] before it tries to insert a record.

Error:

ActiveRecord::StatementInvalid (Mysql::Error: Duplicate entry '7-2' for key 'index_favorites_on_user_id_and_location_id': 
INSERT INTO `favorites` (`created_at`, `updated_at`, `user_id`, `location_id`) VALUES ('2009-04-25 01:50:47', '2009-07-24 06:34:59', 7, 2)):