One night, Erik visits Carol when Kennicott is not home. As Erik leaves the house, Carol sees Mrs. Westlake walking past. The next day, Kennicott tells Carol that Mrs. Westlake is spreading rumors about her around town and revealing the secret that Carol had confided to her. Kennicott warns Carol not to confide in Mrs. Westlake.
Likewise, Vida warns Carol that rumors are circulating town and warns her not to let a young man's innocent fondness grow into something more serious. Vida reveals her past relationship with Kennicott and her opinion that Carol does not appreciate her husband enough. Vida tells Carol that she must lead a spotless life if she wants the credibility to effectively reform other people. Carol imagines leaving Kennicott, but realizes how much her husband needs her. Around town, Carol continues to feel self-conscious about everyone watching her.
Fern Mullins asks Carol to chaperone a barn dance with her, but Carol cannot go. The next day, Carol hears Mrs. Bogart screaming at Fern and throwing her out of her house. Mrs. Bogart tells the whole town that Fern took her son, Cy, to the barn dance, got him drunk, and physically corrupted him. Carol and Kennicott find the story incredulous. Fern admits that she took Cy to the dance but says that he stole the whiskey from some farmer, got himself drunk, and then tried to force himself on her. As she is strong, Fern had been able to resist Cy's advances as she drove him home. Carol defends Fern's name around town, but Mrs. Bogart does not listen, claiming that a teacher should have higher morals and that the school board should fire Fern.
Carol attempts to comfort Fern, who feels humiliated by the whole episode. As Carol speaks to all the members of the school board to clear Fern's name, she realizes that they believe Fern's story but will still fire her for the sake of appearances. Fern resigns and leaves town. A week later, Fern sends Carol a letter thanking her for her friendship.
Although Carol fears another scandal, she decides to take a walk with Erik in the country. As they walk, they see Kennicott's car approaching them. Kennicott simply asks if they want a lift back to town. Carol feels great suspense when they return home, but Kennicott calmly tells her that he knows she has been honest and that he will not play the role of the outraged husband. Instead, he asks her to stop seeing Erik before she creates a scandal like Fern's. He then tells her how much he loves her and asks if she still loves him. Carol promises no to see Erik again.
The next evening, Carol receives a letter from Erik that informs her that he is moving to Minneapolis. When Erik leaves, Erik's father comes into town in order to have a few unkind words with Carol. When Kennicott comes home, Carol tells him that she needs to take a trip far away from Gopher Prairie. He agrees, asking her to wait three weeks before they leave. They decide to go to California and leave Hugh with the Smails.