Giannetto is an idle scapegrace who has lost his inheritance and is carelessly living on his affluent merchant friend, Benito, on whom he habitually charges his debts.

Beatrice is immediately favourable towards Giannetto's suit, but Aragon tell her that he is in fact an idle pauper, and disappointed she reluctantly consents to marry the Prince instead.

Changing her mind after, she seeks out Benito to find whether the tales are true; he convinces her that it is but idle slander, and she promptly plights her troth to Giannetto.

Giannetto reluctantly agrees to this; the forfeit in the bond is a pound of flesh from the defaulter; Benito is confident that he can pay the money in time, Mordecai hopes this will be an opportunity for taking revenge for the loss of his daughter.

Giannetto, telling Beatrice of his friend's danger, receives thrice the sum from her coffers and attempts to redeem the bond, but Mordecai is obdurate – the date is past.

Beatrice then disguises herself as a Doctor of Law and comes to the court; initially agreeing to the Jew's demands, when he prepares his knife to the breast of Benito she halts him, reminding him that is he is not utterly exact in the flesh he removes - one pound - his life will be forfeit.