Raina and Catherine have silently agreed to keep up their ruse about the nature of Bluntschli, the Swiss mercenary they aided. When they hear Sergius and Petkoff tell the story, which the two men have learned second-hand from Bluntschli's friend, they pretend to find it scandalous and shocking. Sergius’s apology to Raina for telling the unseemly story is convincing, but is an exaggerated performance. The manner of his apology, coupled with the stage direction note of his disillusioned moodiness, is telling of how his future actions toward Raina will be.
Petkoff, in this scene, is revealed to be a somewhat self-serious and not terribly insightful mind. Catherine runs the home and colludes with Raina, and the two women have helped to make improvements to the property in Petkoff’s absence. Petkoff admits that the Bulgarians had reach a peace agreement, despite winning the illustrious battle of won by Sergius, because the combined forces of the Serbs and Austrians are simply too much for Bulgaria to bear. Raina and Catherine are disappointed by this. They want war to be a clean divide between heroism and deceit, and Petkoff’s truce clouds what they understood before to be a single shining example of Sergius’ heroism. This is a further disillusionment for Raina, who has already been disabused of some of her thoughts about idyllic soldierly life from her interactions with Bluntschli.
There is perhaps another striking feature in this part of the drama, which is the presence of chance, or coincidence. The story that Petkoff and Sergius happen to have heard the story about the retreating soldier in fact took place in their very house. This coincidence, and the coincidences that will occur later on, might seem to strain the realism of the play. However, they intentionally make a serious matter about war funny, if not absurd, to the audience. The coincidences can also be seen as narrative shortcuts, or methods for cutting down the exposition of the play. Tensions between and within characters are exposed: Raina is forced to choose between honesty and cunning, and Bluntschli’s self-awareness is a tonic for Sergius’s pompous and clueless behavior.