When Curly goes after Lennie, Lennie fights back and crushes his hand.
Curly is a tough guy who fancies himself a fighter. George knows the minute he meets him that he will be trouble. He warns Lennie to stay away from him, because a man like that always has to prove himself. Unfortunately, Curly does not stay away.
Curly finds a pretext for fighting, saying that Lennie is laughing at him. Then he attacks. Lennie does not understand.
Lennie looked helplessly at George, and then he got up and tried to retreat. Curley was balanced and poised. He slashed at Lennie with his left, and then smashed down his nose with a right. Lennie gave a cry of terror. (Ch. 3)
Lennie cries out to George, who tries to intervene. Curly does not listen, and Lennie ends up grabbing his hand. Lennie is too scared to let go, even as the hand is being crushed in Lennie’s super-strong grip.
When George is finally able to get through to Lennie, Curly can only slink away because he doesn’t want to admit that Lennie bested him in the fight. He tells everyone his hand was stuck in a machine.
This incident foreshadows trouble for George and Lennie. It demonstrates that Lennie is a danger to not only small animals, but people as well. His behavior threatens George and Lennie’s stability and happiness.