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During a day of surf and sand, Aldous and Peter run into each other and begin talking.
Inadvertently, Aldous informs Peter that he and Sarah began having sex a full year before she broke up with Peter.
Peter immediately goes to Rachel to confess what happened, but she is hurt and demands that he leave and never contact her again.
Before leaving, Peter takes down a naked picture of Rachel at a local bar and returns it to her, despite enduring a beat-down from the owner.
Peter goes to Sarah's room to console her where she admits she still loves him and tries to rekindle their romance.
The two start to engage in sexual activity, but Peter gets ambivalent feelings towards Sarah and cuts it off, realizing that he has become much happier with Rachel.
Taking pity on him, hotel concierge Rachel (Mila Kunis) offers him an expensive suite for free in exchange for cleaning up the room himself.
He sends an invitation to Rachel for the opening night performance.
Although extremely hesitant at first, Rachel eventually decides to attend.
After the successful performance, Rachel congratulates Peter and tells him she's looking into attending school in the area.
When Peter confronts Sarah, she tells him she began feeling disconnected emotionally from him and she couldn't do anything to make their relationship work.
Further exacerbating the situation is Sarah's obvious jealousy of the budding relationship between Peter and Rachel, while Peter (through observing Sarah's relationship with Aldous) begins to realize that his relationship with her wasn't as great as he remembered.