Antonio responds that he should lend it to him as an enemy, exacting a harsh penalty if he defaults on the loan. Shylock protests that there are no hard feelings and offers to lend the money interest-free. As a joke, he asks Antonio to promise him a pound of flesh, from any portion of the body, if he fails to pay on time. Bassanio warns his friend against the deal, but Antonio replies that he will have no trouble paying on time. He then tells Shylock that they will meet at the notary's office to sign the bond. Bassanio remains suspicious of the deal, but Antonio promises him that his ships will arrive in a month, and then he will have no trouble paying the debt.
Act II, scene 1
Meanwhile, the Prince of Morocco arrives in Belmont. Portia leads him to dinner before he makes his choice.

Act II, scene 2
Lancelot Gobbo, a servant of Shylock, struggles over whether or not to run away from his master--his conscience tells him to stay, but his "fiend" says that he should abandon Shylock. His father, who is nearly
blind, approaches him (not knowing that Lancelot is his son) and asks the way to Shylock's house. As a joke, his son gives him confusing directions, and then reports that he himself is dead. When his father begins to weep, he reveals the deception, and Old Gobbo embraces him.
Lancelot tells him that he wants to shift his service from Shylock to Bassanio. Bassanio passes, at that moment, and father and son appeal to him so confusingly that it takes a moment before he can understand what they are asking him. Finally he takes Lancelot Gobbo into his employment, saying that Shylock had offered him Lancelot’s service.

Act II, scene 3
Jessica, Shylock's daughter, gives Lancelot a letter to carry to Bassanio's friend Lorenzo, and when he is gone, tells the audience that she plans to marry Lorenzo and convert to Christianity.

Act II, scene 4
Gratiano, Lorenzo, Salerio and Solanio agree to slip away from Bassanio's house at supper and return in disguise, accompanied by a torchbearer. As they talk, Lancelot brings Jessica's letter. Lorenzo reads it, and pays Lancelot to return to Jessica and tell her that he will not fail her. He tells his friends Salerio and Solanio to
prepare for the night's revelry--he has found a torchbearer. He then tells Gratiano that Jessica will carry their torch--she is going escape her father's house with her gold and jewels--and that he, Lorenzo, plans to marry her.

Act II, scene 5
Shylock tells Lancelot that he will have to work harder in Bassanio's house than he does in Shylock's.