Julia, in her dressing room, reflects on an alarming message she has received from Faulkland about a dreadful accident. She bemoans how many unhappy moments he has caused her. Faulkland enters and says he must say goodbye to her, then explains that after their disagreement he was in such a bad mood that he quarreled with someone and now must flee England. If they were already married and he could take her with him, he would not dread becoming an exile.
Faulkland pushes Julia’s tolerance to its breaking point; she has written sending her forgiveness and instead of a message of thanks, he has sent her a cryptic and worrisome message. When he arrives, he suggests that he must leave the country, and since they are not married, it would not be proper for her to come with him.
Surmising that Faulkland has killed a man in a duel and must now flee to escape prosecution, Julia says if the circumstances were not so serious, she would be glad to have this opportunity to prove her dedication to him. Regardless, she says that they should elope and be married. Faulkland asks whether she wants some time to consider her choice, but she responds that she does not need time: now that his situation has changed for the worse, she knows it is her duty to follow her heart and not abandon him. He says that now that his fortune has been changed for the worse, he will have less money and may be even more ill-tempered: will she really want to be his wife then? She pledges to use her money to support him and her love to comfort him.
Although dueling was a fact of life among members of the upper classes in the late 18th century, and tolerated by the authorities, causing your opponent’s death in a duel was prosecuted on a case-by-case basis, so most men in this situation would flee the country and wait to hear by letter whether it was safe for them to come back. Julia agrees to run away with Faulkland and share this uncertain fate, saying that it is her duty to follow him wherever he goes because they are pledged to one another, and that this is also what she truly wants.
Faulkland then exclaims that he has proved Julia’s love and throws away the pretense of having fought in a duel and pledges to marry her tomorrow. Astonished, she asks if this means there was no duel at all, and he admits the truth. Julia says she rejoices to hear that he has not committed a crime that she feared even to name, but that she’s terribly hurt that his doubts in her drove him to this trick. Faulkland tries to interject, but Julia refuses to let him. She gives a long speech: she endured his treatment of her for a year because she loved him and because her father had arranged their marriage before his death. But now, this new insult, which was so totally unprovoked, has made her give up hope that she will ever be able to make him stop doubting her love. She promises that she will never marry another, but will pray for him to learn to have a better temperament, and to remember that it deprived him of the love of a woman who would have been dedicated to him no matter what. Faulkland curses himself for the trick he played on Julia and curses love for driving him to act so insanely, then rushes off to meet Absolute for the duel with Sir Lucius.
Faulkland has finally found the edge of Julia’s patience, and she ends their engagement. The last straw was this lie, which forced her to face the terrible choice between giving him up and choosing to follow someone who had just murdered a man into an uncertain future. In her long speech, which provides an overview of the feminine virtues valued by 18th century moral codes, Julia explains that she stayed with Faulkland through all his bad behavior out of both love and duty. She says that she believed that by being patient and showing her love, she would eventually be able to exert a good, moral influence on him and cause him to become reasonable. She then expresses that her loyalty to him, as someone she is pledged to, will never end, and so she will be bound to him forever even though they will not marry, and so she will not marry anyone else.
Lydia and a maid enter looking for Julia. Lydia reflects to herself that she hasn’t gotten over Absolute, and that when Julia chides her for giving him up, as she knows Julia will, she will probably go back to him. Julia enters and Lydia tells her she needs her consolation, but then notices that Julia’s face is tear-stained. She asks if Faulkland has been tormenting her, but Julia denies this, saying in an aside that she would not accuse him even to a sister.
Julia immediately proves the truth of her statement of loyalty to Faulkland by refusing to reveal what has happened between them to Lydia. Lydia has come looking for Julia because she hopes to get a lecture on why she ought to forgive Absolute for his deception—because she trusts Julia to remind her of her role as a woman.
Lydia then says that her woes must surely surpass Julia’s: she has found out that Beverley is Absolute. Julia confesses that Faulkland had already told her about Absolute’s disguise. Lydia is angry to hear that Julia and Faulkland had been in on the trick and says she will never have Absolute now. She pines for the romantic elopement she had dreamed of having and denigrates the conventional wedding she can expect if she does marry him. Lydia reminisces about cold nights when she would sneak out to see Beverley, to which Julia responds that she would laugh at Lydia if she were in a better mood. But, since she is in a bad mood, she says that she must be earnest and tell her cousin not to let her caprice cause unhappiness to herself and a man who loves her sincerely, and that she ought to forgive and marry him.
After taking such pleasure in the idea that Beverley was deceiving her aunt, Lydia now has a taste of the other side of being deceived while others know the truth. Lydia is disgusted at the idea that she will now have to have a conventional wedding and disappointed that she will never get to live through the adventure of an elopement with a penniless ensign. Still, Lydia is nostalgic for the romance of her trysts with Absolute, and Julia can see that she still loves Absolute. She reminds Lydia of the stakes of her decision: there is no reason to give up on a happy marriage because of these disappointments.
Mrs. Malaprop, Fag, and David now burst into the room, Mrs. Malaprop shrieking incoherently about “suicide, parricide and simulation.” After a great deal of pretentious preamble and unnecessarily roundabout explanations of the need to communicate news of such importance to women who are so concerned in the fates of the men involved, Fag and David reveal that Captain Absolute, Acres, and Faulkland are involved in a duel. Julia says that they should hasten to the scene of the duel to stop it, but Mrs. Malaprop objects that this is not their place. Then David reveals that Sir Lucius is involved as well, and Mrs. Malaprop exclaims that they must hurry to stop the bloodshed. Fag promises to lead the ladies to the spot, while David goes off in search of Sir Anthony.
With this comic entrance and lead-up to the crucial information being revealed, Sheridan ends the scene by preparing the audience for a climactic showdown between all of Lydia’s suitors—those both real and imaginary. Apparently Sir Lucius has a reputation as a fearsome or at least bloodthirsty dueler, as the mention of his name immediately changes Mrs. Malaprop’s mind about the seriousness of the situation.