diff --git a/todo/tests/unit/exceptions/__init__.py b/todo/tests/unit/exceptions/__init__.py
new file mode 100644
index 0000000..84a4d93
--- /dev/null
+++ b/todo/tests/unit/exceptions/__init__.py
@@ -0,0 +1 @@
+# Added this because without this file Django isn't able to auto detect the test files
diff --git a/todo/tests/unit/exceptions/test_exception_handler.py b/todo/tests/unit/exceptions/test_exception_handler.py
new file mode 100644
index 0000000..80dcb71
--- /dev/null
+++ b/todo/tests/unit/exceptions/test_exception_handler.py
@@ -0,0 +1,73 @@
+from unittest import TestCase
+from unittest.mock import Mock, patch
+from rest_framework.exceptions import ValidationError
+from rest_framework.response import Response
+from rest_framework import status
+
+from todo.exceptions.exception_handler import handle_exception, format_validation_errors
+from todo.dto.responses.error_response import ApiErrorDetail, ApiErrorSource
+
+
+class ExceptionHandlerTests(TestCase):
+    @patch("todo.exceptions.exception_handler.format_validation_errors")
+    def test_returns_400_for_validation_error(self, mock_format_validation_errors: Mock):
+        validation_error = ValidationError(detail={"field": ["error message"]})
+        mock_format_validation_errors.return_value = [
+            ApiErrorDetail(detail="error message", source={ApiErrorSource.PARAMETER: "field"})
+        ]
+
+        response = handle_exception(validation_error, {})
+
+        self.assertIsInstance(response, Response)
+        self.assertEqual(response.status_code, status.HTTP_400_BAD_REQUEST)
+        expected_response = {
+            "statusCode": 400,
+            "message": "Invalid request",
+            "errors": [{"source": {"parameter": "field"}, "detail": "error message"}],
+        }
+        self.assertDictEqual(response.data, expected_response)
+
+        mock_format_validation_errors.assert_called_once_with(validation_error.detail)
+
+    def test_uses_default_handler_for_non_validation_error(self):
+        generic_exception = ValueError("Something went wrong")
+
+        response = handle_exception(generic_exception, {})
+        self.assertIsNone(response)
+
+
+class FormatValidationErrorsTests(TestCase):
+    def test_formats_flat_validation_errors(self):
+        errors = {"field": ["error message 1", "error message 2"]}
+        expected_result = [
+            ApiErrorDetail(detail="error message 1", source={ApiErrorSource.PARAMETER: "field"}),
+            ApiErrorDetail(detail="error message 2", source={ApiErrorSource.PARAMETER: "field"}),
+        ]
+
+        result = format_validation_errors(errors)
+
+        self.assertEqual(result, expected_result)
+
+    def test_formats_nested_validation_errors(self):
+        errors = {
+            "parent_field": {
+                "child_field": ["child error message"],
+                "another_child": {"deep_field": ["deep error message"]},
+            }
+        }
+        expected_result = [
+            ApiErrorDetail(detail="child error message", source={ApiErrorSource.PARAMETER: "child_field"}),
+            ApiErrorDetail(detail="deep error message", source={ApiErrorSource.PARAMETER: "deep_field"}),
+        ]
+
+        result = format_validation_errors(errors)
+
+        self.assertEqual(result, expected_result)
+
+    def test_formats_non_list_dict_validation_error(self):
+        errors = {"field": "Not a list or dict"}
+        expected_result = [ApiErrorDetail(detail="Not a list or dict", source={ApiErrorSource.PARAMETER: "field"})]
+
+        result = format_validation_errors(errors)
+
+        self.assertEqual(result, expected_result)