diff --git a/src/Orchard.Web/Modules/Orchard.Packaging/Commands/PackagingCommands.cs b/src/Orchard.Web/Modules/Orchard.Packaging/Commands/PackagingCommands.cs
index ab28b9676..4c6590819 100644
--- a/src/Orchard.Web/Modules/Orchard.Packaging/Commands/PackagingCommands.cs
+++ b/src/Orchard.Web/Modules/Orchard.Packaging/Commands/PackagingCommands.cs
@@ -64,6 +64,9 @@ namespace Orchard.Packaging.Commands {
             try {
                 _packageManager.Install(packageId, Version, Path.GetFullPath(location), ApplicationPath);
             }
+            catch (OrchardException e) {
+                Context.Output.WriteLine(T("Could not install the package: {0}", e.Message));
+            }
             catch(Exception e) {
                 // Exceptions area thrown by NuGet as error messages
                 Context.Output.WriteLine(HttpUtility.HtmlDecode(T("Could not install the package: {0}", e.Message).Text));
diff --git a/src/Orchard.Web/Modules/Orchard.Packaging/Controllers/PackagingServicesController.cs b/src/Orchard.Web/Modules/Orchard.Packaging/Controllers/PackagingServicesController.cs
index 5decf5b4d..3cbb0c6c6 100644
--- a/src/Orchard.Web/Modules/Orchard.Packaging/Controllers/PackagingServicesController.cs
+++ b/src/Orchard.Web/Modules/Orchard.Packaging/Controllers/PackagingServicesController.cs
@@ -2,7 +2,6 @@ using System;
 using System.Collections.Generic;
 using System.IO;
 using System.Linq;
-using System.Web;
 using System.Web.Hosting;
 using System.Web.Mvc;
 using NuGet;
@@ -12,6 +11,7 @@ using Orchard.FileSystems.AppData;
 using Orchard.Localization;
 using Orchard.Modules.Services;
 using Orchard.Mvc.Extensions;
+using Orchard.Packaging.Extensions;
 using Orchard.Packaging.Services;
 using Orchard.Packaging.ViewModels;
 using Orchard.Recipes.Models;
@@ -20,7 +20,6 @@ using Orchard.Security;
 using Orchard.Themes;
 using Orchard.UI.Admin;
 using Orchard.UI.Notify;
-using Orchard.Utility.Extensions;
 using IPackageManager = Orchard.Packaging.Services.IPackageManager;
 using PackageBuilder = Orchard.Packaging.Services.PackageBuilder;
 
@@ -32,7 +31,6 @@ namespace Orchard.Packaging.Controllers {
         private readonly IPackageManager _packageManager;
         private readonly IPackagingSourceManager _packagingSourceManager;
         private readonly IAppDataFolderRoot _appDataFolderRoot;
-        private readonly INotifier _notifier;
         private readonly IModuleService _moduleService;
         private readonly IRecipeHarvester _recipeHarvester;
         private readonly IRecipeManager _recipeManager;
@@ -41,18 +39,16 @@ namespace Orchard.Packaging.Controllers {
             ShellSettings shellSettings,
             IPackageManager packageManager,
             IPackagingSourceManager packagingSourceManager,
-            INotifier notifier,
             IAppDataFolderRoot appDataFolderRoot,
             IOrchardServices services,
             IModuleService moduleService)
-            : this(shellSettings, packageManager, packagingSourceManager, notifier, appDataFolderRoot, services, moduleService, null, null) {
+            : this(shellSettings, packageManager, packagingSourceManager, appDataFolderRoot, services, moduleService, null, null) {
         }
 
         public PackagingServicesController(
             ShellSettings shellSettings,
             IPackageManager packageManager,
             IPackagingSourceManager packagingSourceManager,
-            INotifier notifier,
             IAppDataFolderRoot appDataFolderRoot,
             IOrchardServices services,
             IModuleService moduleService,
@@ -61,7 +57,6 @@ namespace Orchard.Packaging.Controllers {
 
             _shellSettings = shellSettings;
             _packageManager = packageManager;
-            _notifier = notifier;
             _appDataFolderRoot = appDataFolderRoot;
             _moduleService = moduleService;
             _recipeHarvester = recipeHarvester;
@@ -103,7 +98,7 @@ namespace Orchard.Packaging.Controllers {
             if (_shellSettings.Name != ShellSettings.DefaultName || !Services.Authorizer.Authorize(StandardPermissions.SiteOwner, T("Not authorized to add sources")))
                 return new HttpUnauthorizedResult();
 
-            var source = _packagingSourceManager.GetSources().Where(s => s.Id == sourceId).FirstOrDefault();
+            var source = _packagingSourceManager.GetSources().FirstOrDefault(s => s.Id == sourceId);
             if (source == null) {
                 return HttpNotFound();
             }
@@ -119,47 +114,58 @@ namespace Orchard.Packaging.Controllers {
 
                     IPackageRepository packageRepository = PackageRepositoryFactory.Default.CreateRepository(new PackageSource(source.FeedUrl, "Default"));
                     IPackage package = packageRepository.FindPackage(packageId);
-                    ExtensionDescriptor extensionDescriptor = _packageManager.GetExtensionDescriptor(package, packageInfo.ExtensionType);
+                    ExtensionDescriptor extensionDescriptor = package.GetExtensionDescriptor(packageInfo.ExtensionType);
 
                     return InstallPackageDetails(extensionDescriptor, redirectUrl);
                 }
             }
-            catch (Exception) {
-                Services.Notifier.Error(T("Package installation failed."));
-            }
+           catch (OrchardException e) {
+               Services.Notifier.Error(T("Package installation failed: {0}", e.Message));
+               return View("InstallPackageFailed");
+           }
+           catch (Exception) {
+               Services.Notifier.Error(T("Package installation failed."));
+               return View("InstallPackageFailed");
+           }   
 
-            return Redirect(redirectUrl);
+           return Redirect(redirectUrl);
         }
 
         public ActionResult InstallLocally(string redirectUrl) {
             if (_shellSettings.Name != ShellSettings.DefaultName || !Services.Authorizer.Authorize(StandardPermissions.SiteOwner, T("Not authorized to install packages")))
                 return new HttpUnauthorizedResult();
 
-            if (Request.Files == null ||
-                Request.Files.Count == 0 ||
-                string.IsNullOrWhiteSpace(Request.Files.Get(0).FileName)) {
+            var httpPostedFileBase = Request.Files.Get(0);
+            if (httpPostedFileBase == null 
+                || Request.Files.Count == 0 
+                || string.IsNullOrWhiteSpace(httpPostedFileBase.FileName)) {
 
                 throw new OrchardException(T("Select a file to upload."));
             }
             try {
-                HttpPostedFileBase file = Request.Files.Get(0);
-                string fullFileName = Path.Combine(_appDataFolderRoot.RootFolder, Path.GetFileName(file.FileName)).Replace(Path.DirectorySeparatorChar, '/');
-                file.SaveAs(fullFileName);
-                ZipPackage package = new ZipPackage(fullFileName);
+                string fullFileName = Path.Combine(_appDataFolderRoot.RootFolder, Path.GetFileName(httpPostedFileBase.FileName)).Replace(Path.DirectorySeparatorChar, '/');
+                httpPostedFileBase.SaveAs(fullFileName);
+                var package = new ZipPackage(fullFileName);
                 PackageInfo packageInfo = _packageManager.Install(package, _appDataFolderRoot.RootFolder, HostingEnvironment.MapPath("~/"));
-                ExtensionDescriptor extensionDescriptor = _packageManager.GetExtensionDescriptor(package, packageInfo.ExtensionType);
+                ExtensionDescriptor extensionDescriptor = package.GetExtensionDescriptor(packageInfo.ExtensionType);
                 System.IO.File.Delete(fullFileName);
 
                 if (DefaultExtensionTypes.IsTheme(extensionDescriptor.ExtensionType)) {
                     Services.Notifier.Information(T("The theme has been successfully installed. It can be enabled in the \"Themes\" page accessible from the menu."));
-                } else if (DefaultExtensionTypes.IsModule(extensionDescriptor.ExtensionType)) {
+                }
+                else if (DefaultExtensionTypes.IsModule(extensionDescriptor.ExtensionType)) {
                     Services.Notifier.Information(T("The module has been successfully installed."));
 
                     return InstallPackageDetails(extensionDescriptor, redirectUrl);
                 }
             }
+            catch (OrchardException e) {
+                Services.Notifier.Error(T("Package uploading and installation failed: ", e.Message));
+                return View("InstallPackageFailed");
+            }
             catch (Exception) {
                 Services.Notifier.Error(T("Package uploading and installation failed."));
+                return View("InstallPackageFailed");
             }
 
             return Redirect(redirectUrl);
diff --git a/src/Orchard.Web/Modules/Orchard.Packaging/Extensions/PackageExtensions.cs b/src/Orchard.Web/Modules/Orchard.Packaging/Extensions/PackageExtensions.cs
index 33aebcfff..96ebc0501 100644
--- a/src/Orchard.Web/Modules/Orchard.Packaging/Extensions/PackageExtensions.cs
+++ b/src/Orchard.Web/Modules/Orchard.Packaging/Extensions/PackageExtensions.cs
@@ -1,4 +1,8 @@
-using NuGet;
+using System;
+using System.IO;
+using System.Linq;
+using NuGet;
+using Orchard.Environment.Extensions.Folders;
 using Orchard.Environment.Extensions.Models;
 using Orchard.Packaging.Models;
 
@@ -41,5 +45,27 @@ namespace Orchard.Packaging.Extensions {
                 packageId.Substring(Services.PackagingSourceManager.GetExtensionPrefix(DefaultExtensionTypes.Theme).Length) :
                 packageId.Substring(Services.PackagingSourceManager.GetExtensionPrefix(DefaultExtensionTypes.Module).Length);
         }
+
+
+        public static ExtensionDescriptor GetExtensionDescriptor(this IPackage package, string extensionType) {
+            IPackageFile packageFile = package.GetFiles().FirstOrDefault(file => {
+                var fileName = Path.GetFileName(file.Path);
+                return fileName != null && fileName.Equals(
+                    DefaultExtensionTypes.IsModule(extensionType) ? "module.txt" : "theme.txt",
+                    StringComparison.OrdinalIgnoreCase);
+            });
+
+            if (packageFile != null) {
+                var directoryName = Path.GetDirectoryName(packageFile.Path);
+                if (directoryName != null) {
+                    string extensionId = Path.GetFileName(directoryName.TrimEnd('/', '\\'));
+                    using (var streamReader = new StreamReader(packageFile.GetStream())) {
+                        return ExtensionHarvester.GetDescriptorForExtension("", extensionId, extensionType, streamReader.ReadToEnd());
+                    }
+                }
+            }
+
+            return null;
+        }
     }
 }
\ No newline at end of file
diff --git a/src/Orchard.Web/Modules/Orchard.Packaging/Orchard.Packaging.csproj b/src/Orchard.Web/Modules/Orchard.Packaging/Orchard.Packaging.csproj
index 904c15566..71fb5c29f 100644
--- a/src/Orchard.Web/Modules/Orchard.Packaging/Orchard.Packaging.csproj
+++ b/src/Orchard.Web/Modules/Orchard.Packaging/Orchard.Packaging.csproj
@@ -51,6 +51,7 @@
       <RequiredTargetFramework>3.5</RequiredTargetFramework>
     </Reference>
     <Reference Include="System.ServiceModel" />
+    <Reference Include="System.Transactions" />
     <Reference Include="System.Web.Mvc, Version=3.0.0.0, Culture=neutral, PublicKeyToken=31bf3856ad364e35, processorArchitecture=MSIL">
       <SpecificVersion>False</SpecificVersion>
       <HintPath>..\..\..\..\lib\aspnetmvc\System.Web.Mvc.dll</HintPath>
@@ -173,7 +174,9 @@
   <ItemGroup>
     <Content Include="Views\PackagingServices\InstallModuleDetails.cshtml" />
   </ItemGroup>
-  <ItemGroup />
+  <ItemGroup>
+    <Content Include="Views\PackagingServices\InstallPackageFailed.cshtml" />
+  </ItemGroup>
   <Import Project="$(MSBuildBinPath)\Microsoft.CSharp.targets" />
   <Import Project="$(MSBuildExtensionsPath32)\Microsoft\VisualStudio\v10.0\WebApplications\Microsoft.WebApplication.targets" />
   <!-- To modify your build process, add your task inside one of the targets below and uncomment it. 
diff --git a/src/Orchard.Web/Modules/Orchard.Packaging/Services/FolderUpdater.cs b/src/Orchard.Web/Modules/Orchard.Packaging/Services/FolderUpdater.cs
index d2d6546d4..a11670baf 100644
--- a/src/Orchard.Web/Modules/Orchard.Packaging/Services/FolderUpdater.cs
+++ b/src/Orchard.Web/Modules/Orchard.Packaging/Services/FolderUpdater.cs
@@ -8,6 +8,7 @@ using Orchard.Logging;
 namespace Orchard.Packaging.Services {
     public interface IFolderUpdater : IDependency {
         void Backup(DirectoryInfo existingFolder, DirectoryInfo backupfolder);
+        void Restore(DirectoryInfo backupfolder, DirectoryInfo existingFolder);
     }
 
     [OrchardFeature("PackagingServices")]
@@ -29,6 +30,10 @@ namespace Orchard.Packaging.Services {
             CopyFolder(GetFolderContent(existingFolder), backupfolder);
         }
 
+        public void Restore(DirectoryInfo backupfolder, DirectoryInfo existingFolder) {
+            CopyFolder(GetFolderContent(backupfolder), existingFolder);
+        }
+
         private void CopyFolder(FolderContent source, DirectoryInfo dest) {
             foreach (var file in source.Files) {
                 CopyFile(source.Folder, file, dest);
diff --git a/src/Orchard.Web/Modules/Orchard.Packaging/Services/IPackageManager.cs b/src/Orchard.Web/Modules/Orchard.Packaging/Services/IPackageManager.cs
index 240290990..e3e79192c 100644
--- a/src/Orchard.Web/Modules/Orchard.Packaging/Services/IPackageManager.cs
+++ b/src/Orchard.Web/Modules/Orchard.Packaging/Services/IPackageManager.cs
@@ -8,7 +8,5 @@ namespace Orchard.Packaging.Services {
         PackageInfo Install(IPackage package, string location, string applicationPath);
         PackageInfo Install(string packageId, string version, string location, string applicationPath);
         void Uninstall(string packageId, string applicationPath);
-
-        ExtensionDescriptor GetExtensionDescriptor(IPackage package, string extensionType);
     }
 }
\ No newline at end of file
diff --git a/src/Orchard.Web/Modules/Orchard.Packaging/Services/PackageInstaller.cs b/src/Orchard.Web/Modules/Orchard.Packaging/Services/PackageInstaller.cs
index 267d16a82..62c337725 100644
--- a/src/Orchard.Web/Modules/Orchard.Packaging/Services/PackageInstaller.cs
+++ b/src/Orchard.Web/Modules/Orchard.Packaging/Services/PackageInstaller.cs
@@ -1,12 +1,14 @@
 using System;
 using System.IO;
 using NuGet;
+using Orchard.ContentManagement;
 using Orchard.Environment.Extensions;
 using Orchard.Environment.Extensions.Models;
 using Orchard.FileSystems.VirtualPath;
 using Orchard.Localization;
 using Orchard.Packaging.Extensions;
 using Orchard.Packaging.Models;
+using Orchard.UI;
 using Orchard.UI.Notify;
 using NuGetPackageManager = NuGet.PackageManager;
 
@@ -78,7 +80,26 @@ namespace Orchard.Packaging.Services {
                 }
             }
 
-            return ExecuteInstall(package, packageRepository, location, applicationPath);
+            var packageInfo = ExecuteInstall(package, packageRepository, location, applicationPath);
+
+            // check the new package is compatible with current Orchard version
+            var descriptor = package.GetExtensionDescriptor(packageInfo.ExtensionType);
+
+            if(descriptor != null) {
+                if(new FlatPositionComparer().Compare(descriptor.OrchardVersion, typeof(ContentItem).Assembly.GetName().Version.ToString()) >= 0) {
+                    if (previousInstalled) {
+                        // restore the previous version
+                        RestoreExtensionFolder(package.ExtensionFolder(), package.ExtensionId());
+                    }
+                    else {
+                        // just uninstall the new package
+                        Uninstall(package.Id, _virtualPathProvider.MapPath("~\\"));
+                    }
+                    throw new OrchardException(T("The package is compatible with version {0} and above. Please update Orchard or install another version of this package.", descriptor.OrchardVersion));
+                }    
+            }
+
+            return packageInfo;
         }
 
         /// <summary>
@@ -218,6 +239,35 @@ namespace Orchard.Packaging.Services {
             }
         }
 
+        private bool RestoreExtensionFolder(string extensionFolder, string extensionId) {
+            var source = new DirectoryInfo(_virtualPathProvider.MapPath(_virtualPathProvider.Combine("~", extensionFolder, extensionId)));
+
+            if (source.Exists) {
+                var tempPath = _virtualPathProvider.Combine("~", extensionFolder, "_Backup", extensionId);
+                string localTempPath = null;
+                for (int i = 0; i < 1000; i++) {
+                    localTempPath = _virtualPathProvider.MapPath(tempPath) + (i == 0 ? "" : "." + i.ToString());
+                    if (!Directory.Exists(localTempPath)) {
+                        Directory.CreateDirectory(localTempPath);
+                        break;
+                    }
+                    localTempPath = null;
+                }
+
+                if (localTempPath == null) {
+                    throw new OrchardException(T("Backup folder {0} has too many backups subfolder (limit is 1,000)", tempPath));
+                }
+
+                var backupFolder = new DirectoryInfo(localTempPath);
+                _folderUpdater.Restore(backupFolder, source);
+                _notifier.Information(T("Successfully restored local package to local folder \"{0}\"", source));
+
+                return true;
+            }
+
+            return false;
+        }
+
         private bool BackupExtensionFolder(string extensionFolder, string extensionId) {
             var source = new DirectoryInfo(_virtualPathProvider.MapPath(_virtualPathProvider.Combine("~", extensionFolder, extensionId)));
 
diff --git a/src/Orchard.Web/Modules/Orchard.Packaging/Services/PackageManager.cs b/src/Orchard.Web/Modules/Orchard.Packaging/Services/PackageManager.cs
index 77b4660d9..1f25d630f 100644
--- a/src/Orchard.Web/Modules/Orchard.Packaging/Services/PackageManager.cs
+++ b/src/Orchard.Web/Modules/Orchard.Packaging/Services/PackageManager.cs
@@ -32,6 +32,9 @@ namespace Orchard.Packaging.Services {
             try {
                 return installer();
             }
+            catch (OrchardException) {
+                throw;
+            }
             catch (Exception exception) {
                 var message = T(
                     "There was an error installing the requested package. " +
@@ -69,22 +72,6 @@ namespace Orchard.Packaging.Services {
             _packageExpander.Uninstall(packageId, applicationPath);
         }
 
-        public ExtensionDescriptor GetExtensionDescriptor(IPackage package, string extensionType) {
-            IPackageFile packageFile = package.GetFiles().FirstOrDefault(file =>
-                                                            Path.GetFileName(file.Path).Equals(
-                                                                DefaultExtensionTypes.IsModule(extensionType) ? "module.txt" : "theme.txt",
-                                                                StringComparison.OrdinalIgnoreCase));
-
-            if (packageFile != null) {
-                string extensionId = Path.GetFileName(Path.GetDirectoryName(packageFile.Path).TrimEnd('/', '\\'));
-                using (StreamReader streamReader = new StreamReader(packageFile.GetStream())) {
-                    return ExtensionHarvester.GetDescriptorForExtension("", extensionId, extensionType, streamReader.ReadToEnd());
-                }
-            }
-
-            return null;
-        }
-
         #endregion
     }
 }
\ No newline at end of file
diff --git a/src/Orchard.Web/Modules/Orchard.Packaging/Views/Gallery/Modules.cshtml b/src/Orchard.Web/Modules/Orchard.Packaging/Views/Gallery/Modules.cshtml
index 83584767f..0aa90dc5d 100644
--- a/src/Orchard.Web/Modules/Orchard.Packaging/Views/Gallery/Modules.cshtml
+++ b/src/Orchard.Web/Modules/Orchard.Packaging/Views/Gallery/Modules.cshtml
@@ -36,7 +36,7 @@
         <button type="submit">@T("Search")</button>
     </fieldset>
 
-    if (Model.Extensions.Count() > 0) {
+    if (Model.Extensions.Any()) {
         <ul class="contentItems">
         @foreach (var item in Model.Extensions) {
             <li>
@@ -75,7 +75,7 @@
                         </div>
 
                         <div class="properties">
-                            <p>@(item.Description == null ? T("(No description").Text : item.Description)</p>
+                            <p>@(item.Description ?? T("(No description").Text)</p>
                             <ul class="pageStatus group">
                                 <li>@T("Last Updated: {0}", item.LastUpdated)</li>
                                 <li>&nbsp;&#124;&nbsp;@T("Author: {0}", !string.IsNullOrEmpty(item.Authors) ? item.Authors : T("Unknown").ToString())</li>
diff --git a/src/Orchard.Web/Modules/Orchard.Packaging/Views/PackagingServices/InstallPackageFailed.cshtml b/src/Orchard.Web/Modules/Orchard.Packaging/Views/PackagingServices/InstallPackageFailed.cshtml
new file mode 100644
index 000000000..7bcb3f064
--- /dev/null
+++ b/src/Orchard.Web/Modules/Orchard.Packaging/Views/PackagingServices/InstallPackageFailed.cshtml
@@ -0,0 +1,4 @@
+@* Used as Notification don't durvive a Redirection  *@
+@{
+    Layout.Title = T("Install package failed");
+}