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On a street near the gate to Vienna, we catch Mariana and Isabella in mid-conversation about the plan to punk Angelo.
Isabella reveals that the friar (who is really the Duke) has advised her to accuse Angelo of sleeping with her. Even though she knows it's a lie (Angelo really slept with Mariana without knowing it), she's willing to go along with the scheme.
We also learn that Isabella has been told she shouldn't worry if the friar pretends like he's not on her side. It's all part of the plan.
Friar Peter announces that the women should get ready because the Duke is coming.