Everyone continues to celebrate Beowulf's defeat of Grendel. Danish warriors race their horses down the hills, the sun rises, and King Hrothgar and his queen return to Heorot Hall.
King Hrothgar gives a short speech, thanking God for Grendel's defeat and claiming Beowulf as an adopted son. He's not literally adopting Beowulf, of course – hulking Geat warriors do OK without foster parents – he's just symbolically including Beowulf in his family.
Now that Beowulf has Grendel's severed arm as a trophy, slimy Unferth isn't boasting anymore.
Everyone works together to repair the damage caused to the inside of Heorot Hall by Beowulf's fight with Grendel.
The narrator reminds us that we will all face death, just as Grendel had to face death.
King Hrothgar comes to the hall in a formal procession for a victory feast. All the most famous warriors eat and drink together, and then drink some more, and some more, and everyone is friendly and at peace.
Next, King Hrothgar presents Beowulf with gifts: an embroidered banner, breast-mail, an embossed helmet, and a sword. Last, but definitely not least, Hrothgar gives Beowulf eight horses with gold bridles, one of which has a fancy saddle designed for a king in battle. The narrator praises Hrothgar; this is exactly what a king is supposed to do to reward a hero.
King Hrothgar also gives gifts of gold and treasures to the other Geat warriors.
Hrothgar and Beowulf also have some morbid business to take care of. They negotiate a price for the life of the Geat who was killed by Grendel, and Hrothgar pays this money to Beowulf. In medieval Scandinavian culture, this "death-price" was to prevent a blood feud from happening when the relatives of the dead man became angry at whoever was responsible for his death. Think of it as life insurance that your family and friends buy after the fact instead of before.
Now that all the eating, drinking, and gift-giving is done, all the Geats and Danes have left to do is listen to the minstrel sing tales of adventure. He begins his song with the moment when King Hnaef of the Danes dies in battle. Let the minstrel's tale begin.
Hildeburh, the wife of King Finn, is caught in the middle of a war: members of her husband's tribe, the Frisians, are fighting a battle against her brother's tribe, the Danes. Hildeburh's son and brother are both killed and she mourns them bitterly.
Many of King Finn's greatest Frisian warriors are also lost in the battle against the Danes. Finn is forced to negotiate a truce with the most important surviving Danish warrior, Hengest.
The truce has two conditions. One, the Frisians will clear out a hall and throne-room for the Danes to use. Two, every day when King Finn gives out gifts and treasures to his followers, he'll give just as much to the Danes as he does to his own men.
King Finn swears to the terms of the treaty and agrees that the surviving Danes will be guaranteed fair treatment. After all, they don't have a leader to give out treasure and hold them together anymore.
The bodies of the slain Danes are burnt on a funeral pyre, still wearing their golden helmets and mail-coats. Hildeburh orders that her own son's body be burnt along with the body of his uncle, King Hnaef. She howls in mourning as their bodies are consumed in flames.
The great days of the Danes are over now; they head back to their homes, saddened by the loss of many of their comrades.
The Danish leader, Hengest, stays with the Frisians all winter, homesick and powerless, resenting King Finn and the truce. He can't go home because of the stormy winter seas.
In the spring, Hengest longs to travel home across the seas – but he also longs for revenge against the Frisians and their allies, the Jutes.
Another of the Danes, Hunlafing, goads Hengest into rebellion. There is an uprising; the Danes kill King Finn, murder his allies, loot his hall, and take Hildeburh back to Denmark with them.
The minstrel ends his song there, with betrayal and rebellion.
Back in the world of Beowulf and King Hrothgar, everyone is happy with the song. The wine jug passes around the room.
Queen Wealhtheow comes to sit between King Hrothgar and his nephew, Hrothulf. Unferth is nearby, still praised for his courage in spite of the fact that he killed his own brothers recently. (If you're thinking, "He did WHAT? Did I miss something?", don't worry. This is the first we've heard of it.)
Wealhtheow gives Hrothgar a goblet to drink from and rejoices in their fortune and their family. She tells her husband that she is confident that Hrothulf is loyal and would take care of the tribe and Hrothgar's two young sons, Hrethric and Hrothmund, if Hrothgar were killed. (If you're starting to get lost in all the names starting with H, take a look at the "Characters" section to refresh your memory about the most important ones.)
A goblet is brought to Beowulf, who is sitting between Hrothgar's sons. Beowulf is presented with even more expensive gifts: two gold arm bangles, a mail-shirt, rings, and a gold torque (a kind of necklace). The narrator describes what will happen to the torque in the future: Beowulf's king, Hygelac, will wear it in his last battle, and the Franks will steal it from his corpse. Cheery, eh?
Queen Wealhtheow formally presents the torque to Beowulf, asking him to guide and protect her sons and wishing him luck and blessings.