--- a/mercurial/merge.py
+++ b/mercurial/merge.py
@@ -65,8 +65,8 @@ def checkunknown(wctx, mctx):
     for f in wctx.unknown():
         if f in man:
             if mctx.filectx(f).cmp(wctx.filectx(f).data()):
-                raise util.Abort(_("'%s' already exists in the working"
-                                   " dir and differs from remote") % f)
+                raise util.Abort(_("untracked local file '%s' differs"\
+                                   " from remote version") % f)
 
 def forgetremoved(wctx, mctx):
     """

--- a/tests/test-merge1.out
+++ b/tests/test-merge1.out
@@ -10,7 +10,7 @@ diff -r d9e5953b9dec b
 M b
 0 files updated, 0 files merged, 1 files removed, 0 files unresolved
 %% merge should fail
-abort: 'b' already exists in the working dir and differs from remote
+abort: untracked local file 'b' differs from remote version
 %% merge of b expected
 merging for b
 merging b