diff --git a/eden/scm/sapling/ext/rebase.py b/eden/scm/sapling/ext/rebase.py
index 9cf1ea908bdd6..7a217fed67cf6 100644
--- a/eden/scm/sapling/ext/rebase.py
+++ b/eden/scm/sapling/ext/rebase.py
@@ -250,6 +250,7 @@ def __init__(self, repo, ui, templ, inmemory=False, opts=None):
 
         self.collapsef = opts.get("collapse", False)
         self.collapsemsg = cmdutil.logmessage(repo, opts)
+        self.contf = opts.get("continue", False)
         self.date = opts.get("date", None)
 
         e = opts.get("extrafn")  # internal, used by e.g. hgsubversion
@@ -674,6 +675,7 @@ def _performrebasesubset(self, tr, subset, pos, prog):
                             _("%s (in %s); switching to on-disk merge\n")
                             % (kindstr, pathstr)
                         )
+                        cmdutil.bailifchanged(repo)
                     ui.log(
                         "rebase",
                         rebase_imm_new_restart=str(True).lower(),
@@ -790,7 +792,7 @@ def _performrebaseone(self, rev, ctx, desc, tr, dest):
         if self.collapsef:
             storecollapsemsg(repo, self.collapsemsg)
 
-        if len(repo[None].parents()) == 2:
+        if self.contf and len(repo[None].parents()) == 2:
             repo.ui.debug("resuming interrupted rebase\n")
         else:
             with ui.configoverride(
diff --git a/eden/scm/tests/test-rebase-bail-merge-state.t b/eden/scm/tests/test-rebase-bail-merge-state.t
index bb358f2b4c61b..40ec7cd6cf6d0 100644
--- a/eden/scm/tests/test-rebase-bail-merge-state.t
+++ b/eden/scm/tests/test-rebase-bail-merge-state.t
@@ -1,3 +1,5 @@
+#require no-eden
+
   $ enable rebase undo
   $ setconfig rebase.experimental.inmemory=true
   $ newclientrepo
@@ -11,31 +13,51 @@
   $ hg whereami
   426bada5c67598ca65036d57d9e4b64b0c1ce7a0
   112478962961147124edd43549aedd1a335e44bf
-FIXME: not correct!
+Rebase is in-memory - works okay and leaves us in merge state:
   $ hg rebase -r $C -d $B
   rebasing dc0947a82db8 "C"
-  note: not rebasing dc0947a82db8, its destination (rebasing onto) commit already has all its changes
   $ hg whereami
   426bada5c67598ca65036d57d9e4b64b0c1ce7a0
   112478962961147124edd43549aedd1a335e44bf
 
 
-Similar, but falling back to on-disk rebase:
+Falling back to on-disk rebase:
   $ newclientrepo
   $ drawdag <<EOS
   > B C # C/B = conflict
   > |/
   > A
   > EOS
+Start with rebase dest checked out:
   $ hg go -q $B
   $ hg debugsetparents $B $A
   $ hg whereami
   112478962961147124edd43549aedd1a335e44bf
   426bada5c67598ca65036d57d9e4b64b0c1ce7a0
-FIXME: not correct!
+Rebase errors out after transitioning to on-disk merge:
+  $ hg rebase -r $C -d $B
+  rebasing ce63d6ee6316 "C"
+  merging B
+  hit merge conflicts (in B); switching to on-disk merge
+  abort: outstanding uncommitted merge
+  [255]
+  $ hg whereami
+  112478962961147124edd43549aedd1a335e44bf
+  426bada5c67598ca65036d57d9e4b64b0c1ce7a0
+
+Start with rebase dest _not_ checked out:
+  $ hg go -q $A
+  $ hg debugsetparents $B $A
+  $ hg whereami
+  112478962961147124edd43549aedd1a335e44bf
+  426bada5c67598ca65036d57d9e4b64b0c1ce7a0
+Rebase errors out after transitioning to on-disk merge:
   $ hg rebase -r $C -d $B
   rebasing ce63d6ee6316 "C"
-  note: not rebasing ce63d6ee6316, its destination (rebasing onto) commit already has all its changes
+  merging B
+  hit merge conflicts (in B); switching to on-disk merge
+  abort: outstanding uncommitted merge
+  [255]
   $ hg whereami
   112478962961147124edd43549aedd1a335e44bf
   426bada5c67598ca65036d57d9e4b64b0c1ce7a0