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Quotes within dialogue

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Robinne Weiss

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I'm sure this has been addressed somewhere on the web, but I can't find it, and I'm curious what you all would suggest.

It's easy to have characters do short quotes within their dialogue. E.g.: John said, "Of course she's my wife. I distinctly heard her say, 'I do'."

But what if a character is telling an extended story with dialogue? I currently have a character (who is a bit of a storyteller), relating a conversation between himself and a dragon. In telling the story, he would naturally use dialogue, but for me writing it down, it becomes tricky--it is dialogue within dialogue. If I follow the rules of dialogue, there would be multiple paragraphs of dialogue within his story, which is itself dialogue. Or, because it is someone relating the dialogue, do I flow it all together in one paragraph?

For example, would it be:
"She landed in front of me and said, 'Well, well, well...Magnus MacDiermont.'
'That's Sir Magnus to you,' I replied."

Or would it be:
"She landed in front of me and said, 'Well, well, well...Magnus MacDiermont.' 'That's Sir Magnus to you,' I replied."

Or would it be something entirely different? Nothing looks right to me...
Or maybe I should find a way to relate this story not in dialogue...
Your thoughts? Suggestions? Cake? (there's been far too little cake here lately...;) )
 
The second example looks correct to me. It may be a bitch to type, but an accomplished reader skims through blocks of dialogue getting the gist of it quickly.

I was surprised to find a punctuation rule new to me about speech/quotation marks. I'd seen it used in novels, putting it down as a typo or bad editing, not taking in that it was a rule. I'm referring to the multi-paragraph rule where closing quotation marks are only used at the end of the final paragraph of a character's speech.
 
It's an old guy telling a young kid about an encounter with a dragon when he was younger. I could sort of set it apart from the rest of their conversation and simplify my punctuation issues that way, but I want the kid to ask questions along the way, so he has to stop and explain a few things. I think I'll just change his storytelling style a bit, so he uses less dialogue when telling the tale. Perhaps make the dragon a little less chatty than I'd intended, too :)
 
The second example looks correct to me. It may be a bitch to type, but an accomplished reader skims through blocks of dialogue getting referring to the multi-paragraph rule where closing quotation marks are only used at the end of the final paragraph of a character's speech.

Oh yes, that's a rule alright. It's one I actually notice when it's not followed.. I suppose it avoids having to keep on identifying the speaker in each paragraph.
 
It's an old guy telling a young kid about an encounter with a dragon when he was younger. I could sort of set it apart from the rest of storytelling style a bit, so he uses less dialogue when telling the tale. Perhaps make the dragon a little less chatty than I'd intended, too :)
Now I understand. Thank you. I think that both are correctly punctuated, but the first is perhaps the better because it shows more clearly the change in speaker.
 
I was surprised to find a punctuation rule new to me about speech/quotation marks. I'd seen it used in novels, putting it down as a typo or bad editing, not taking in that it was a rule. I'm referring to the multi-paragraph rule where closing quotation marks are only used at the end of the final paragraph of a character's speech.
Yes, but I didn't realise that it was a rule. In my latest tome I used this structure because I got teed off with all the quotation marks. The page looks much tidier. However, I notice that there is a lot of variation in approach across the authors I read.
 
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