Grace enters. The Dutch Merchant says that he has seen her before, at an inn in Antwerp. Grace worries that she has been found out and tells the merchant that he must be mistaken. The merchant sees through Savourwit's scheme; he tells Sir Oliver that he has been deceived by his son and servant: his wife is not dead, and this is not his real daughter. Sir Oliver isn't sure what he should believe. He sends Grace away. The Dutch merchant says that he must leave for a moment to attend to a business matter. He leaves his little son in Sir Oliver's care and promises to return soon.