The victorious outlaws assemble in the forest to divide up the spoils they plundered from the burning castle. Cedric is distraught because Athelstane was killed. He pardons Gurth, makes him a free man and gives him some land. Rowena arrives with an escort. De Bracy, now a prisoner, asks her to forgive him, but Rowena is reluctant to forgive him for all the misery his passion for her has caused. The Black Knight tells Cedric he will soon ask a boon from him, and Cedric says it is granted already, because he is so grateful for the Black Knight’s assistance. The Black Knight then frees De Bracy, who grabs a horse and rides away. Locksley gives the Black Knight a bugle and tells him to blow three notes on it if he should ever need assistance in the forest. Locksley then distributes the booty in a fair manner. One-tenth is to be given to the church; some goes to the families of the dead, and some is given to the outlaws according to their rank and merit. Locksley’s decisions in the matter are accepted by all. Friar Tuck arrives belatedly, with Isaac in tow. The Friar claims that Isaac has converted to Christianity, but Isaac vehemently denies it. The Friar aims a blow at Isaac, but the Black Knight restrains him. The Friar and the Black Knight then exchange blows in a test of strength, which the Black Knight wins. Another prisoner is then brought to Locksley. This is Prior Aymer of Jorvaulx.
Locksley tells the Prior that he will be freed only on payment of a ransom. He asks Isaac to decide what the ransom should be. Isaac says six hundred crowns. Asked to name Isaac’s ransom, the Prior sets it at a thousand crowns. Both men protest loudly about the large sums expected of them. Locksley lowers Isaac’s ransom to five hundred crowns, since he knows that Isaac will also have to pay a ransom to free Rebecca from De Bois-Guilbert. Locksley has been cared for in the past by Rebecca when he was sick, so this accounts for his relative generosity to Isaac. Locksley also persuades the Prior to intervene with De Bois-Guilbert in order to win Rebecca’s freedom. After lengthy negotiations, Isaac goes off on his mission. The Black Knight departs, his real identity still a mystery.
At the castle of York, Prince John and his men plot to seize the throne. But they are disturbed by reports that Front-de-Boeuf, De Bracy and De Bois-Guilbert have been captured or killed, since they need the help of these knights if their plan is to succeed. De Bracy arrives and tells them the whole story. He also says that Richard is in England, and he has spoken to him and seen him. It is clear that he means the Black Knight. De Bracy intends to flee for Flanders. On hearing the news, Fitzurse decides to take sanctuary in the church. Prince John knows that everyone is deserting him, but he is defiant, saying that they must kidnap and imprison Richard before he raises an army against them. De Bracy refuses to have anything to do with this, but Fitzurse says he will take charge of the operation. While Fitzurse does the planning, Prince John arranges to have De Bracy, whom he distrusts, spied upon.
Isaac journeys to the castle of Templestowe, the home of the Templar Order, to negotiate Rebecca’s freedom. Before he arrives he stays with his friend Nathan. Nathan advises him not to go further because the strict and virulently anti-Semitic Grand Master of the Templar Order, Lucas de Beaumanoir, is currently staying at Templestowe. Isaac is not deterred, and journeys on. When he arrives and asks to speak to De Bois-Guilbert, he is shown first to the Grand Master. Isaac says he bears a letter from Prior Aymer for De Bois-Guilbert; Grand Master has his attendant read the letter to him. The letter asks De Bois-Guilbert to release Rebecca for a ransom, but it also lets slip that both the Prior and De Bois-Guilbert have departed far from the Christian ideal of temperance. The Grand Master seizes on the reference to Rebecca as a witch, and claims that she works her curses through the devil. He resolves to put her on trial and burn her at the stake.
Chapter XXXII, which centers around Locksley and his men, makes it clear that the outlaws are in fact more worthy of respect than the unscrupulous Normans who oppress the people. The band of outlaws actually form a model society. Their income is distributed fairly according to people’s individual needs and the needs of the group. Locksley is a just leader, respected by all his men. All the outlaws obey the code of conduct that they have agreed upon, and Locksley proves to be a fair arbiter of any quarrels that arise. The outlaws’ little society may not have the high-flown ideals of the chivalric code, but it is honest and without hypocrisy.
Chapter XXXV begins the process of setting up the climax of part three of the novel.