Slim agrees to give Lennie a puppy. When George thanks him, Slim says Lennie is the best worker he's ever seen even though he's "cuckoo." George defends Lennie, and Slim again admires George and Lennie's friendship.
George's pride when Slim praises Lennie's work and his defense of Lennie when Slim calls him "cuckoo" conveys George's heartfelt affection for Lennie.
George explains that he grew up with Lennie and took care of him after his Aunt Clara died. George admits that at first he took advantage of Lennie's willingness to do whatever he told him, but soon felt ashamed and since then has taken good care of him. He adds that having Lennie as his companion keeps him from getting "mean," as most ranch workers do.
George describes his own moral development. George once took advantage of Lennie, as all the men on the ranch take advantage of each other. But his friendship with Lennie taught him to avoid such "meanness."
George also tells Slim what happened in Weed. Lennie touched a woman's dress. She objected. He panicked and wouldn't let go. The woman claimed it was rape, and Lennie and George had to flee a mob.
Lennie and George's earlier trouble stems from Lennie's innocent love of soft things and a woman's false accusal of rape.
Lennie enters with his puppy under his coat. George orders him to return the puppy to its litter. While Lennie is gone, Candy and his crippled dog enter the bunkhouse, followed by Carlson. Carlson again suggests they put the dog out of its misery. Slim agrees and offers Candy one of his puppies.
Slim and Carlson can't imagine that Candy has an emotional attachment to his dog, so they can't comprehend that killing the dog would pain him.
Whit enters, holding a magazine containing a letter to the editor from a ranch hand they once knew. Meanwhile, Carlson persuades Candy to let him shoot the dog. He takes the dog outside. As the men play cards, a shot fires. Candy stares at the wall.
The "mercy" killing of Candy's dog shows how the strong destroy the weak on the ranch. The killing also foreshadows future events.
Crooks, the black stable manager enters with news for Slim. Slim leaves with Crooks, and the men discuss Curley's wife. They agree with George that women don't belong on ranches, and that she'll end up causing trouble. Whit invites George to come to a brothel with him the next night. George declines, saying he and Lennie are trying to save money.
George again predicts that Curley's wife will cause trouble. He views all women as temptresses. And he implies that women might interfere with his dream of buying a farm with Lennie.
Lennie and Carlson enter the bunkhouse. Curley enters soon after, again looking for his wife. He suspects she's with Slim in the barn and storms out. The other men follow, hoping for a fight.
Curley's wife is a threat even to Curley. He thinks she'll humiliate him by cheating on him.
George and Lennie stay behind, and soon begin talking about their farm. Having overheard George's description of the farm as a place where they can just "belong," Candy offers his life savings of $350 to help them buy it. Though George is at first suspicious, soon the three men are making plans.
In losing his dog, Candy lost his community. He's now attracted to George and Lennie's idea of a farm as a new community. He'll give everything he has for fellowship.
As the other men return, George warns Lennie and Candy to keep the farm a secret. Candy whispers back that he should have shot his dog himself.
George will later heed Candy's advice.
Slim, Curley, Carlson, and Whit enter. Curley apologizes to Slim for suspecting him, and all the men mock Curley for being so insecure. Curley thinks Lennie is also laughing at him, though Lennie was just smiling while thinking of tending rabbits on the farm. Curley starts punching Lennie, bloodying his face. Lennie only fights back when George tells him he may. He then easily breaks Curley's hand.
Curley's insecurity about his wife leads him to mistake Lennie's heartfelt smile for a taunt, and to try to save face by showing he's stronger than Lennie. This suggests that Lennie and George's dream will lead unintentionally to trouble.
Curley wants to fire George and Lennie, but Slim tells him if he does no one on the ranch will respect him. Curley gives in. Lennie asks George if he can still tend the rabbits on their farm. George says yes.
This moment may be the most hopeful in the novel. The men have rallied around George and Lennie. Their dream seems achievable.