Locksley's lieutenant Allan-a-Dale has missed the action at Torquilstone, having been away on an ambush of Prior Aymer. The terrified abbot is outraged at having been abducted, pointing out that his fancy cut lace has been torn. He has been robbed of his portable property, and Allan-a-Dale demands a ransom in addition. Locksley expresses astonishment that Allan-a-Dale would mistreat a man of the church, but he advises that he pay the ransom or else the priory will need a new prior. Aymer fails to claim a degree of safety as a priest, so he appeals to Locksley as a lusty woodsman by demonstrating his proficiency on a hunting horn. Locksley adds to his ransom as a penalty for blowing like a Norman.
One of the outlaws then suggests that Aymer set the ransom for Isaac and Isaac set the ransom for Aymer. Locksley asks Isaac if he is familiar with the financial health of the priory, and Isaac is more than happy to divulge the waste, fraud, and abuse to which he is privy and which the prior argues was all legitimate. Isaac sets Aymer's ransom at six hundred crowns. The prior wheedles and pleads inability to pay such an exorbitant amount. Isaac offers to arrange the ransom himself if Aymer will sign for it, which Locksley agrees to. In his turn, Isaac objects that he is a poor man who will be ruined by a ransom. When Aymer claims that Isaac has an undeserved fortune, Isaac rails that all these people who kick and spit on him suddenly become flattering friends when they need a loan. Locksley tells Aymer that Isaac has been fair with him, but Aymer sets Isaac's ransom at one thousand crowns. Isaac cries out against having both his child and his livelihood taken from him.
An outlaw tells Isaac that a dark-haired woman was carried off by the Templar. Isaac is crushed by the news, believing Rebecca better off dead than in the hands of Sir Brian. Moved by Isaac's grief, Locksley sets his ransom at four hundred crowns, so that he will have something left with which to ransom his daughter from Sir Brian. Isaac falls to his knees in gratitude and tries to kiss the outlaw's hem, but Locksley recoils and tells Isaac to kneel to God rather than poor sinners. Aymer chimes in, suggesting himself as a representation of God who would be well placed, in return for repentance and appropriate gift giving, to intervene for him with God and the Templar.
Locksley takes Isaac aside and advises him to take advantage of the prior's offer. He tells Isaac that he knows about his secret money chest because he was once a patient of Rebecca's in Isaac's own house. Isaac then recognizes Locksley and authorizes him to negotiate with the prior for his help in freeing Rebecca. Aymer agrees to a deal arranged by Locksley and asks to borrow Isaac's writing tablets. He won't, however, touch Isaac's pen, so Locksley shoots down a goose and presents the prior with a fresh quill. The prior writes a letter of safe conduct to Templestowe for Isaac and a letter to Sir Brian. Reluctantly, he also writes the IOU to Isaac for his ransom. Locksley returns his mules and gives him traveling money but withholds the jewelry. Aymer objects that they are sacred gifts to the church, and the friar assures him that he will take care of them.
After Aymer leaves, Isaac writes an order for the ransom money and seals it with his signet. Locksley warns him not to be stingy in arranging his daughter's ransom and sends him off with an escort for his safety. The Black Knight has watched all Locksley's dealings and wonders if Locksley knows the outlaw's true identity. They agree to part respecting each other's anonymity.