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The reference to "truce" refers to an agreement or treaty. The lady announces that [Gawain] was fooled instantly-an agreement must be made not to disclose the vulnerability of Gawain. The lady says if Gawain does not agree to the truce, she shall tie him to the bed. The lady "laughing lightly ... [she] jested. The word "jested" means the lady tells a tale and recites a romance.