Wilfrid, knight of Ivanhoe, takes his name from the fiefdom, or barony, assigned to him by King Richard, which in his absence has been given to Front-de-Boeuf by Prince John. De Bracy notes that Front-de-Boeuf had better prepare to return Ivanhoe to its previous owner. John's followers are quick to support the prince's right to reassign the properties of the crusaders, but John is uneasy about the return of one of Richard's devoted (and dangerous) minions.
Fitzurse assures John that Ivanhoe is fatally wounded and has been carried off by his friends, presumably by Cedric and Rowena. John asks for information about Rowena, and discovering that she is a wealthy landowner, he offers her to De Bracy—being underage, Rowena does not have the right to refuse if the prince chooses a husband for her.
As John finishes ordering an irresistible invitation to Cedric's party to attend the night's banquet, an urgent message from the king of France is delivered to him. "The Devil is unchained," it states, meaning that Richard has obtained release from his captors and may turn up in England at any time.
John is terrified because his plots are advanced enough to condemn him but not far enough to allow him to supplant Richard on his return. Fitzurse urges that the tournament be cut short and John's allies consolidated in York as soon as possible.
There is still one more day of events, however, and John is still fixated on the insolent archer. The archery events are moved forward to the present afternoon and the rest of the tournament cancelled. John also insists that the evening's banquet go on as planned.
Seeing the archer standing by, John asks him why he has not entered the contest. The archer replies that John might not like it if the prize had to be given a third time to someone out of favor with the prince.
The archer's name is Locksley, and John proposes a wager—he'll add money to the prize (a horn) if Locksley wins, but if the archer loses, he will be stripped and whipped with bowstrings. If he refuses to enter the contest, his gear will be destroyed and he will be expelled as a coward. Locksley notes that it hardly seems fair, especially since the other contestants are the best in the region.
The target is extremely difficult and a yeoman named Hubert is the only one to land his arrows in the inner ring. John gleefully goads Locksley, who proposes that if he can outshoot Hubert on the next target, then Hubert will be bound to shoot at a target of Locksley's choosing. Hubert hits the center, but Locksley splits Hubert's arrow with his own. Locksley then sets a willow twig vertically in the ground at the other end of the field and declares that where he comes from, that is a real target.
Hubert refuses to shoot at a target he can hardly see. John insists that Locksley shoot at the impossible target. When Locksley's arrow strikes the twig, even John is delighted and applauds the archer's skill. Locksley, however, refuses to accept the money John wagered, giving his loyalty to Richard as his reason. He disappears among the crowd.
John is by now more anxious about preparing for York than about punishing the archer, so Locksley is not pursued. The prince orders his chamberlain to find Isaac and get an advance of two thousand crowns before sundown—the rest of the loan can be delivered within six days at York. He has arranged the loan already, offering some kind of security, but now sends his ring as a pledge. He adds that if the money doesn't show up, he'll have Isaac's head.