Johannes launches a lengthy discussion of the story of Agnes and the merman. In his version, the merman seduces Agnes and is about to bring her back with him into the sea, but sees humility and faith in her eyes. Unable to violate this innocence, he returns her to her home instead.

As in the other examples, the merman has the choice between hiddenness and disclosure. Hiddenness consists in repentance, but this repentance leaves both himself and Agnes unhappy. Agnes genuinely loves him, so she will be unhappy at being deprived of him. He will be unhappy because he also loves Agnes, and because he will be burdened with the new guilt of making her unhappy.

Johannes suggests that he might surrender to the demonic element in repentance and try to save Agnes by deceiving her and making her no longer love him. In surrendering to the demonic, the merman becomes the single individual who, as a single individual, is higher than the universal.

There are two possibilities according to which the merman could be rescued from the demonic in repentance. On one hand, he can remain hidden and have faith that the divine will save Agnes. On the other hand, he can allow himself to be saved by Agnes and marry Agnes. This movement involves a paradox somewhat similar to Abraham's. The merman's guilt has brought him to make the movement of repentance, which brings him higher the universal. To return to the universal, then, he must make a further movement, by virtue of the absurd, since he cannot return to the universal by his own power.

Johannes next turns to the book of Tobit, which tells of Tobias who wants to marry Sarah, whose seven previous husbands have been killed on the wedding night by the demon that loves her. Johannes suggests that the real hero of the story is not Tobias, for having the courage to marry a woman with such a past, but Sarah, for allowing herself to be healed of this past. She is willing to accept the responsibility for Tobias' fate, and she has faith that, if Tobias survives, she won't grow to resent or hate him for being so deeply in his debt. A woman in her position has to endure a great deal of sympathy, and sympathy is a kind of humiliation.

Sarah is naturally outside the universal by virtue of being in unique circumstances, and so is naturally in the paradox: she can choose either the demonic or the divine. The demonic expresses itself as contempt for others and hatred of sympathy (as we find in Shakespeare's Richard III. The divine expresses itself in Sarah's faith.

Finally, Johannes addresses the story of Faust. Faust, in Johannes' account, is a doubter, but is also sympathetic. He knows that his doubt, if spoken, would throw the world into chaos, and so he remains silent. Ethics condemns this silence, telling him that he should have spoken. However, Johannes suggests, this silence is authorized if the single individual stands in an absolute relation to the absolute. In this case, doubt becomes guilt, and Faust also finds himself in the paradox.

In case anyone doubts that silence is sometimes called for, Johannes refers to the Sermon on the Mount. There, Jesus recommends that fasters anoint their heads and wash their faces so that no one can see that they are fasting. Sometimes, clearly, one's personal life is incommensurable with reality, and in those cases it is necessary to deceive.

Johannes' discussion of the demonic and of guilt brings us away from the straightforward distinctions between the aesthetic, the ethical, and the religious. This discussion is very rich but maddeningly difficult, and this commentary can do little more than attempt some clarification.

The merman and Sarah are in similar situations in that they are prevented by their guilt from realizing the universal in marriage. The merman planned to seduce Agnes, but after seeing the innocence in her eyes, he feels guilty at trying to deceive her. He cannot now marry her because he cannot disclose to her his former dishonest intentions: his guilt keeps him from marrying. Sarah cannot marry Tobias because she knows that he will be killed by the demon. She, too, feels guilt, but of a different kind. Her guilt comes from knowing that she is responsible for the deaths of her seven previous husbands and that she would also be responsible for Tobias' death.

In both cases, these characters' circumstances have isolated them from the universal, and placed them necessarily in the paradox of the single individual. One option open for them is the demonic. For the merman, this would be to make Agnes hate him so as to free her from her love for him. For Sarah, this would be to resent pity and to shut herself off from others. The demonic, it seems, expresses a rejection of the universal from which they have been isolated.

Johannes suggests that the highest the merman can aspire to is marriage with Agnes, but that this movement must be made by virtue of the absurd. It takes all the merman's power to make the movement of repentance, just as it takes all of Abraham's power to make the movement of resignation. The merman repents that he has seduced Agnes, and in his guilt he places himself above the universal. His ultimate goal, however, is to return to the universal, but he does not have the power to do this on his own. He must then rely on the absurd to take him from the isolation of repentance back into the universal and into marriage.

The merman is laudable in wanting to return to the universal because he is wanting, in spite of the obstacles in his way, to face the ethical duties that everyone must face. He has placed himself in a position where realizing the universal is humanly impossible, and he must achieve it by virtue of the absurd.

We should note that there is some connection to Kierkegaard's personal life in the story of Agnes and the merman. The story alludes to Kierkegaard's break with his fiancée, Regine Olsen. In Either/Or he had hinted, in a famous section called The Seducer's Diary, that, like the merman, he was simply a seducer who had tricked Regine into loving him. This behavior might be equated with the demonic, where the merman wants to get Agnes to hate him so that she will not suffer the pain of being separated from one she loves. In this passage, Kierkegaard's explanations become more complex, as he presents Regine with several possible alternatives to explain his behavior.

Like the merman, Sarah also rejoins the universal by virtue of the absurd. She has faith that her marriage to Tobias will not end in disaster, and she is willing to accept the responsibility for his life if it does. Rather than isolate herself from the universal, she makes a leap of faith back into the universal.

Faust, like the fasters mentioned in the Sermon on the Mount, enters as a single individual into an absolute relation to the absolute. Both Faust and the fasters in their different ways enter into a private relation to God, and thus their actions need not be justified to the universal.

Though the particulars are difficult to decipher, the general thrust of this section of the text is straightforward enough. Johannes uses these examples to show that the single individual can sometimes be isolated from the universal and justified in acting against its principles.