 Angèle tells René of the impossibility of their love as she is about to be divorced from one man and is engaged to marry another.Prince Basilowitsch is also at the party, and alarmed at the turn of events, publicly announces his engagement to Angèle.René and Angèle now realize the true situation, but René has no money to buy himself out of the contract, having already squandered much of the 500,000 francs he had received from the prince.