diff --git a/Library/Homebrew/cmd/upgrade.rb b/Library/Homebrew/cmd/upgrade.rb
index 44a88529b1..f27357764a 100644
--- a/Library/Homebrew/cmd/upgrade.rb
+++ b/Library/Homebrew/cmd/upgrade.rb
@@ -14,9 +14,12 @@ module Homebrew extend self
     outdated = if ARGV.named.empty?
       Homebrew.outdated_brews
     else
-      ARGV.formulae.each do |f|
-        raise "#{f} already upgraded" if f.installed?
-        raise "#{f} not installed" unless f.rack.exist? and not f.rack.children.empty?
+      ARGV.formulae.select do |f|
+        unless f.rack.exist? and not f.rack.children.empty?
+          onoe "#{f} not installed"
+        else
+          true
+        end
       end
     end
 
@@ -35,13 +38,34 @@ module Homebrew extend self
     end
 
     outdated.each do |f|
-      installer = FormulaInstaller.new f
-      installer.show_header = false
-      oh1 "Upgrading #{f.name}"
-      installer.install
-      Keg.new(f.linked_keg.realpath).unlink if f.linked_keg.directory?
-      installer.caveats
-      installer.finish # includes link step
+      upgrade_formula f
     end
   end
+
+  def upgrade_formula f
+    outdated_keg = Keg.new(f.linked_keg.realpath) rescue nil
+
+    installer = FormulaInstaller.new f
+    installer.show_header = false
+
+    oh1 "Upgrading #{f.name}"
+
+    # first we unlink the currently active keg for this formula otherwise it is
+    # possible for the existing build to interfere with the build we are about to
+    # do! Seriously, it happens!
+    outdated_keg.unlink if outdated_keg
+
+    installer.install
+    installer.caveats
+    installer.finish # includes link step
+  rescue CannotInstallFormulaError => e
+    onoe e
+  rescue BuildError => e
+    e.dump
+    puts
+  ensure
+    # restore previous installation state if build failed
+    outdated_keg.link if outdated_keg and not f.linked_keg.directory?
+  end
+
 end