This act opens with Antonio in a Venetian Court of Justice, while the Duke and other magnificoes of Venice sit in front for his trial. The Duke explains how the plaintiff is stone hearted and there is no way to save Antonio. The duke asks Shylock, for the one last time, to forgive Antonio, but Shylock remains unmoved by any plea, and prefers a pound of flesh as his payment.
Bassanio offers to pay double the amount of the loan, i.e. six thousand pound in exchange for Antonio’s life, but Shylocks tells him that he would not change his mind even if he is offered six times the money Antonio owes him. In his defence Shylock reminds the Duke of the mistreatment of Jews by Christians and that when he is not demanding any Christian to free any Jew, so he shall not be asked to do away with Antonio’s loan either.
The Duke tells Shylock that he is waiting for Dr. Bellario, a very learned person, to come and give his opinion on this matter, as he, himself alone, was incapable of taking decision in such a delicate matter. He also asks Shylock to wait, failing which, he will close the case without any decision on Shylock’s plea for Justice. Nerissa enters the court in a man’s clothes with a letter from Dr. Bellario. In the letter a highly intelligent and educated doctor is recommended by Dr Bellario to adjudge the case. The Duke inquires about the whereabouts of the Doctor, to which Nerissa replies that he was waiting for permission to enter the court. Duke sends out for him and a doctor named Balthasar enters, who is in fact Portia in the disguise of a man.
Balthasar asks Antonio, if the bond was a valid one, to which Antonio admits positively. Balthasar asks Shylock to forgive Antonio and gives a speech on the benefits of forgiveness but Shylock remains untouched. Therefore, Balthasar exclaims that Shylock is entitled to take his pound of flesh from the chest portion of Antonio as the bond states. Shylock produces a scale to measure the skin that he was about to take off Antonio, but disagrees to Balthasar’s suggestion that he should pay a physician to attend to Antonio so that he doesn’t bleed to death. When Shylock is about to begin, Balthasar stops him and warms him not to draw out even a drop of blood with the flesh, and that if even a single drop of Antonio’s blood comes out, “the State of Venice” will take away everything that belongs to him. Shylock realizes that he has lost his case and tries to fall back and take the amount that Bassanio had offered before, but Balthazar is adamant that he can take only “a pound of flesh” now, and nothing else.
Balthazar further explains that according to a Venetian law, if an outsider threatens a citizens’ life, half of his property is to be given to the citizen and other half to the state, and the life of the foreigner will remain on the “mercy of the Duke”. But the Duke pardons Shylock, against which Shylock demands to be killed instead. Antonio also forgives him and asks the Duke to let him keep half of his property and offers the other half to be taken care of as an inheritance for Jessica and Lorenzo. Antonio puts only one condition that Shylock must convert to Christianity and give everything he has to Lorenzo when he dies. Everything settled, the Duke tells Antonio to thank the young doctor, and Bassanio and Graziano offers to part with anything that the doctor demands. The doctor demands for the gloves and ring that Bassanio is wearing and on Antonio’s insistence, Bassanio gives the ring away, and invites the doctor to a dinner at Antonio’s house. Nerissa decides to test Graziano in a similar way and Balthasar asks him the tell route of “Shylock’s house” to Nerissa, where she has to go to get the deed signed from Shylock which will ensure the passing of his property to Lorenzo.