diff -Nur -X/home/thue/freeciv-dev/no.freeciv freeciv/common/city.c transitive_upgrades2/common/city.c
--- freeciv/common/city.c	Fri Apr  7 19:55:09 2000
+++ transitive_upgrades2/common/city.c	Sat Apr  8 11:53:05 2000
@@ -556,8 +556,9 @@
 {  
   if (!can_build_unit_direct(pcity, id))
     return 0;
-  if (can_build_unit_direct(pcity, unit_types[id].obsoleted_by))
-    return 0;
+  while(unit_type_exists((id = unit_types[id].obsoleted_by)))
+    if (can_player_build_unit_direct(city_owner(pcity), id))
+	return 0;
   return 1;
 }
 
@@ -588,8 +589,9 @@
 {  
   if (!can_player_build_unit_direct(p, id))
     return 0;
-  if (can_player_build_unit_direct(p, unit_types[id].obsoleted_by))
-    return 0;
+  while(unit_type_exists((id = unit_types[id].obsoleted_by)))
+    if (can_player_build_unit_direct(p, id))
+	return 0;
   return 1;
 }
 
@@ -602,8 +604,9 @@
 {
   if (!unit_type_exists(id))
     return 0;
-  if (can_player_build_unit_direct(p, unit_types[id].obsoleted_by))
-    return 0;
+  while(unit_type_exists((id = unit_types[id].obsoleted_by)))
+    if (can_player_build_unit_direct(p, id))
+	return 0;
   return 1;
 }
 
diff -Nur -X/home/thue/freeciv-dev/no.freeciv freeciv/common/unit.c transitive_upgrades2/common/unit.c
--- freeciv/common/unit.c	Fri Apr  7 19:55:10 2000
+++ transitive_upgrades2/common/unit.c	Sat Apr  8 12:09:13 2000
@@ -782,21 +782,20 @@
 **************************************************************************/
 int can_upgrade_unittype(struct player *pplayer, Unit_Type_id id)
 {
-  if (get_invention(pplayer, 
-		    unit_types[id].tech_requirement)!=TECH_KNOWN)
-    return -1;
-  if (unit_types[id].obsoleted_by == -1)
-    return -1;
-  if (get_invention(pplayer,
-		    unit_types[unit_types[id].obsoleted_by].tech_requirement)!=TECH_KNOWN) 
+  Unit_Type_id best_upgrade = -1;
+
+  if (!can_player_build_unit_direct(pplayer, id))
     return -1;
-  while (unit_types[id].obsoleted_by!=-1 && get_invention(pplayer, 
-		       unit_types[unit_types[id].obsoleted_by].tech_requirement)==TECH_KNOWN) {
-    id = unit_types[id].obsoleted_by;
-  }
-  return id;
+  while (unit_type_exists(id = unit_types[id].obsoleted_by))
+    if (can_player_build_unit_direct(pplayer, id))
+      best_upgrade = id;
+
+  return best_upgrade;
 }
 
+/**************************************************************************
+...
+**************************************************************************/
 int unit_upgrade_price(struct player *pplayer, Unit_Type_id from, Unit_Type_id to)
 {
   int total, build;
diff -Nur -X/home/thue/freeciv-dev/no.freeciv freeciv/server/cityturn.c transitive_upgrades2/server/cityturn.c
--- freeciv/server/cityturn.c	Fri Apr  7 19:55:15 2000
+++ transitive_upgrades2/server/cityturn.c	Sat Apr  8 01:18:07 2000
@@ -1132,13 +1132,13 @@
 **************************************************************************/
 static Unit_Type_id upgrade_unit(struct city *pcity, Unit_Type_id id)
 {
-  while(can_build_unit_direct(pcity, id) &&
-	can_build_unit_direct(pcity, unit_types[id].obsoleted_by))
-  {
-    id = unit_types[id].obsoleted_by;
+  Unit_Type_id latest_ok = id;
+  while(unit_type_exists(id= unit_types[id].obsoleted_by)) {
+    if (can_build_unit_direct(pcity, id))
+      latest_ok = id;
   }
     
-  return id;
+  return latest_ok;
 }
 
 /**************************************************************************