diff -Nur -X/home/thue/freeciv-dev/no.freeciv /home/thue/freeciv-dev/freeciv/common/city.c transitive_upgrades2/common/city.c
--- /home/thue/freeciv-dev/freeciv/common/city.c	Mon Apr  3 21:43:00 2000
+++ transitive_upgrades2/common/city.c	Sat Apr  8 00:43:30 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 /home/thue/freeciv-dev/freeciv/server/cityturn.c transitive_upgrades2/server/cityturn.c
--- /home/thue/freeciv-dev/freeciv/server/cityturn.c	Mon Apr  3 21:43:05 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;
 }
 
 /**************************************************************************