The current transaction caot be committed and caot support operations that write to the log file. (Merge encountered duplicates)

I get this error and it points to transaction processing and Try/Catch. I'm not very strong in SQL but particularly weak in these two areas. The code I inherited has both. The actual problem is a Merge encountered duplicates and tried updating same record twice. It would be nice to get that error in email than the one I'm getting.

As I play around trying to understand this I inserted Print @@TranCount statements in various places including the Try and Catch of the Transaction and I don't get anything inside the catch so I presume it isn't even getting to catch.

So I got to looking and this dynamic query actually has another try/catch within the query that gets executed by exec(@MergeQuery).

Questions. 1) How should this try catch be set up? Is the outer try/catch redundant?

The most important issue I'm trying to understand is the Try/Catch but I don't understand why this is even wrapped in a transaction in the first place.

--Transaction count after EXECUTE indicates a mismatching number of BEGIN and COMMIT statements

--MergeQuery1
Declare @MergeQuery1 varchar(max) = '  
begin try   
begin     
declare @ChangeSum table(change varchar(25));    
declare @Inserted int = 0;    
declare @Updated int = 0;  

merge into R_VISN2.TelephoneBookVisn2F528075 P    
using R_Stage.TelephoneBookVisn2F528075 S    
on P.[Sta3n] = S.[Sta3n] and  P.[TelephoneBookVisn2F528075IEN] = S.[TelephoneBookVisn2F528075IEN]    
when MATCHED then    
update set   ... all the columns'

Declare @MergeQuery2 varchar(max) = ' when not matched by target then '

Declare @MergeQuery3 varchar(max) = '     insert        ( ...the columns) '

Declare @MergeQuery4 varchar(max) = ' values      ( ...the columns    ) '

Declare @MergeQuery5 varchar(max) = '
output $action into @ChangeSum;     
set @Inserted = (select count(*) from @ChangeSum where change = ''INSERT'');    
set @Updated = (select count(*) from @ChangeSum where change = ''UPDATE'');   
select @Inserted as Inserted, @Updated as Updated;    

end  
end try    

begin catch     
end catch    '


--===========================





begin transaction;
begin try

declare @MergeQuery varchar(max)

set @MergeQuery = convert(varchar(max), @MergeQuery1) +  convert(varchar(max), @MergeQuery2)
+ ' ' + convert(varchar(max), @MergeQuery3)
+ ' ' + convert(varchar(max), @MergeQuery4)
+ ' ' + convert(varchar(max), @MergeQuery5);


exec(@MergeQuery);

end try

begin catch

 declare
  @Message VARCHAR(4000)
  ,@Severity INT
  ,@State  INT;

 select
  @Message = ERROR_MESSAGE()
  ,@Severity = ERROR_SEVERITY()
  ,@State = ERROR_STATE();

 if @@TRANCOUNT > 0
  rollback transaction;

 raiserror(@Message, @Severity, @State);

end catch;

if @@trancount > 0
begin

 commit transaction;

end