Dramatic irony is when the audience knows more about a situation than the characters in the story do. A great example of this would be the typical horror movie scenario in which a character enters a location the audience knows to be dangerous, therefore creating suspense.
"The Demon Lover" has no dramatic irony, as the audience knows about as much as the protagonist , Mrs. Drover, does. However, it does have irony in general. Irony is when a situation turns out opposite from what one initially expected. The most ironic moment in "The Demon Lover" is when Mrs. Drover tries escaping her one-time paramour via taxi. At first, both the reader and Mrs. Drover believe she will be freed of her sinister ghost-lover's influence. However, the mood takes a turn for the dreadful when the taxi starts moving without Mrs. Drover being asked where she wants to go,...
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which both foreshadows Mrs. Drover's lack of control over her fate and emphasizes her lover's controlling nature. When she finally gets a good look at the driver's face, it is implied that she realizes it is none other than her presumed dead fiancé. This moment is ironic because Mrs. Drover is trying to be proactive in escaping her former lover, yet she only manages to run straight into his arms.
What is the situational irony in "The Demon Lover"?
This is an interesting question, as arguably there is no situational irony in this story. Situational irony is a term used to describe a sudden twist in terms of the ending that we were not expecting and thus is used to refer to a surprise ending. However, arguably, there are enough details in the story that effectively forshadow the grim ending of this excellent ghost story to make the ending entirely expected. We have the mystery letter, the way in which her lover in the flashback seems almost supernaturally possessive of her and finally the draft of air from the basement that suggests that someone is either with Mrs. Drover or has just vacated the house. Either way, it is strongly suggested that the ending is not going to be a happy one, and that Mrs. Drover will face her "demon lover" once more. If you don't agree with this, then the situational irony comes write at the end just when we are led to believe that Mrs. Drover has successfully managed to escape and has reached the taxi and entered it:
The driver braked to what was almost a stop, turned around, and slid the glass panel back: The jolt of this flung Mrs. Drover forward till her face was almost into the glass. Through the aperture driver and passenger, not six inches between them, remained for an eternity eye to eye. Mrs. Drover's mouth hung open for some seconds before she could issue her first scream.
We realise with a chill that Mrs. Drover, far from running away from her demon lover, has actually ran straight into his clutches.