Mrs. Candour is at Sir Peter’s door, attempting to convince the maid to let her in to visit Lady Teazle, whom she says must be very upset and need moral support. The maid leaves and Mrs. Candour complains to herself that she does not know exactly what happened, but wants to get it printed in the gossip pages. Sir Benjamin arrives and they begin to talk over the scandal. Sir Benjamin believes that Sir Peter discovered Lady Teazle with Joseph Surface, but Mrs. Candour insists that the affair was with Charles. Lady Sneerwell arrives and expresses pity for Lady Teazle, then immediately launches into a discussion of her shortcomings. Lady Sneerwell, like Sir Benjamin, believes that Lady Teazle was caught with Joseph, but is alarmed to hear from Mrs. Candour that she was caught with Charles.
Word is out about the scene that occurred between the Teazles at Joseph Surface’s house, but the details are hazy. The gossips, all of whom treated Lady Teazle like a friend, show no loyalty towards her, only a desire to prove that they are the best informed about her presumed downfall. Lady Sneerwell had spread the rumor that Charles and Lady Teazle are lovers herself, but did not know that Joseph was pursuing Lady Teazle at the same time he pursued Maria. She is alarmed to hear that it might actually turn out to be true that Charles, whom she loves, is involved with Lady Teazle.
Sir Benjamin says he is not sure which brother was involved, but he does hope that Sir Peter’s wound will heal. The two ladies had not heard that a duel took place. Sir Benjamin tells them that Sir Peter and one of the Surface brothers fought a duel with swords. Crabtree enters and immediately contradicts his nephew, saying that the duel was fought with pistols. Crabtree and Sir Benjamin argue over how Sir Peter was wounded. It emerges that Crabtree, like Mrs. Candour, believes that Lady Teazle was found with Charles, not Joseph. They all argue, and Crabtree gives an extremely detailed account of what happened and how Sir Peter was wounded. Lady Sneerwell realizes that they do not really know what happened and leaves, hoping to find out the truth.
Knowing the details about the latest scandal is a way for these members of high society to prove that they have a wide social network, full of well-informed friends. To prove their knowledge, the gossips even invent details that can be easily disproven, like a duel. The gossips each cling to their own version of the story, arguing with one another about hypothetical events in a ridiculous fashion. They no longer seem superior to the people they cruelly mock, but confused and insecure about their place in the world as they try to prove their social standing by fabricating stories.
Mrs. Candour, Sir Benjamin, and Mr. Crabtree see Sir Oliver approach. They conclude that he is Sir Peter’s doctor and ask him how the patient is recovering from his wounds. Sir Oliver expresses shock at their preposterous questions as the gossips jockey to give their account of what happened. Sir Peter enters then and Sir Oliver jokes that he is just in time to stop a rumor about his death from being spread. The gossipmongers tell Sir Peter that they are relieved to see that he was not injured in a duel, and that they pity him for his misfortune. Sir Peter yells at the three gossips and kicks them out of his house.
Sir Oliver is once again taken for someone he is not, although this time he does not have to assume a false identity. Instead, the gossips, who will make up details of a story to suit their own purposes, assign him a false identity on the spot. When his identity is revealed, the ridiculous way that the gossips make up false stories to make themselves seem important is also exposed.
Rowley arrives at Sir Peter’s. He and Sir Oliver tell Sir Peter that they have seen both Charles and Joseph, and Sir Oliver agrees with Sir Peter’s assessment: Joseph is “a man of sentiment” and practices what he preaches. Sir Peter sees that they have heard what happened to him and are laughing at him. Rowley says that he ran into Lady Teazle and she asked him to plead her case to Sir Peter. Sir Peter asks if they really know everything that happened. They say they do, and all three laugh, but Sir Peter gets upset and says he never wants to see anyone he knows again. Rowley coaxes Sir Peter not to pay attention to what people he does not respect say about him.
Sir Peter has learned that he is not always right in his judgments of other people. Words are often deceptive: Joseph’s moral speeches and the rumors spread about Charles’s character led Sir Peter to misjudge the Surface brothers. The revelation of Joseph’s bad character also demonstrated to Sir Peter that Rowley may be a wiser man than he is. Rowley believes that Lady Teazle is worth trusting and that the scandalmongers are worth ignoring, and Sir Peter now listens to Rowley’s opinion.
Sir Oliver says that he must now go to Joseph’s, where he will tell the Surface brothers his true identity. Rowley and Sir Peter promise to meet him there. Sir Peter looks into the other room, where he sees Lady Teazle crying. Rowley urges him to go to her. Sir Peter says that people will laugh at him even more when they find out that he has forgiven her. Rowley encourages him to have revenge against gossipmongers by being happy, and Sir Peter agrees.
Lady Teazle and Sir Peter must now apply to their marriage what they have learned about themselves and each other from their experience with Joseph. Lady Teazle saw that she had underestimated her husband’s love for her, and seeing his wife so upset at having hurt and embarrassed him, Sir Peter sees a new side of the witty, mocking Lady Teazle. Thus the “scandal” that might have torn them apart only brings them closer together.