Beautiful Nancy Lammeter is chagrined to see that Godfrey Cass is waiting for her arrival at the Red House for the New Year's party. She had made it clear that she did not want to marry him, let alone anybody else. In the ladies' bedroom, Nancy's aunt, Mrs. Osgood, introduces her to the plain but fashionable Gunn sisters, who find Nancy to be exceptionally pretty when she is all dressed up, with the exception of her hands, which look as if they have been heavily involved with chores. The Gunns are surprised that Nancy is so unrefined and without class, as she is the daughter of a rich country gentleman. Nancy's elder sister, Priscilla, enters the room and immediately offends the Gunns and Mrs. Osgood with her bluntness. Priscilla refers to the Gunns as ugly, and cheerfully admits that she is plain and ugly as well. She is resigned to her life as a spinster, but she tells Nancy to marry someone. At Nancy's insistence, Priscilla and Nancy wear the same dress.
Nancy's place at dinner is between Godfrey Cass and Mr. Crackenthorp, the rector. She wonders fleetingly what it would feel like to be mistress of the Red House as Godfrey's wife. Mr. Crackenthorp remarks at how beautiful Nancy is, and Squire Cass and Dr. Kimble tease her. Both Nancy and Godfrey are uncomfortable with the table's attention, even more so as Godfrey is forced to ask Nancy to dance. As the dancing begins, a group of privileged villagers are allowed in as spectators. The villagers gossip about Godfrey and Nancy's relationship, and speculate as to why Nancy and Godfrey leave the dance early. They leave the dance not for a romantic interlude, but a rip in Nancy's dress. Accompanying Nancy to a side parlor where they wait for Priscilla to help Nancy with her dress, Godfrey asks if she can forgive him for the horrid things he has done to hurt her. Nancy is cold to him in return.
