Armado asks Moth to bring Costard to him to deliver a letter. Moth returns with Costard, who has broken his shin, and the three have a discussion of riddles, morals, and l'envoy. Armado tells Costard that he is going to set him free, on the condition that he will deliver a letter to Jaquenetta. Costard agrees, Armado gives him money, and he and Moth depart.
Berowne enters and asks Costard to deliver a letter to Rosaline for him. Costard agrees, is given more money, and exits. After Costard leaves, Berowne laments his love.
Moth illustrates the precise wordplay present throughout the play here when he, like Berowne, justifies a seemingly contradictory claim: "As swift as lead, sir. . .Is that lead slow which is fired from a gun?" (III.i.57,62).
Costard exhibits the tendency to take language literally in this scene when he receives payments from Armado and Berowne. When Armado gives him remuneration, he decides that "that's the Latin word for three farthings" and says that "I will never buy and sell out of this word" (III.i.136,141). When Berowne gives him a reward, which he calls guerdon, he says "Gardon, O sweet gardon! Better than remuneration; eleven-pence farthing better: most sweet gardon!" (III.i.166-8).
He assumes that these two men speak literally when they say they are giving him remuneration and guerdon--he interprets these words as actual names for the amounts of money he is given. Costard's ignorance draws attention to the way that the men tend to speak metaphorically.
In this scene, Costard appears to make an allusion to The Merchant of Venice, another Shakespeare play, when he says, "My sweet ounce of man's flesh! my incony Jew!" (III.i.134). However, The Merchant of Venice is commonly believed to have been written around 1596-7, after Love's Labour's Lost. Therefore, it is possible that Shakespeare revised Love's Labour's Lost to include this line after he wrote The Merchant of Venice.