Jerry's car is missing again, and Kramer incessantly asks what happened. Tired of Kramer's nosiness, Jerry stonewalls him until he is forced to beg. Finding out that George and Elaine took the car to a flea market, Kramer incessantly asks why he wasn't invited. However, having invited his friend Mike over to watch a boxing match with Jerry, Kramer betrays that they talked behind Jerry's back. With the tables turned, Kramer forces Jerry to beg, and swear to secrecy, to find out that Mike called him a "phony".
Driving back with Elaine, George has a new hat but laments that he will disappoint women by inevitably taking it off. Elaine turns the rearview to appraise her new sunglasses, causing George to swerve and get rear-ended. Back at Jerry's building, George insists on finding street parking, claiming his entire family is constitutionally incapable of paying for garage parking. A perfect parking space is open, but George dawdles to flaunt his supposed parallel parking talents, and half-backs into the space just as Mike, arriving, pulls half in forward.
George and Mike argue, hitting an impasse over whether George ceded the space, or Mike muscled in. With neither backing down, George makes Elaine tell Jerry about the damage. Elaine swigs strong whiskey so she can make up a tall tale about a wild car chase to escape lawless, gun-toting teenagers in a "souped-up" convertible, seemingly eliciting Jerry's sympathy.
Mike calls Jerry and Kramer down to intervene, and George is irked that Mike is on good terms with them both. The standoff draws a crowd, with Jerry, Kramer, and random bystanders all divided by their gut feelings. Elaine flaunts her elaborate sob story to George. Kramer recriminates against George and Elaine for not inviting him, and George blames Jerry for his indiscretion.
A truck driver demands to get through, so impartial third parties move the cars to make way—then put them back in place, continuing the standoff. Jerry figures out George's guilt for the damage, and Sid, the neighborhood car parker, assumes George's parking is again at fault. Failing to exercise discretion, Jerry surprises a neighborhood boy with the news that his father's store is closing.
The standoff continues into the night, as Newman argues that forward parallel parking stands for societal collapse. A woman sympathizes with George, but he drives her away by being too desperate to keep his hat on. Even two passing policemen fail to break up the standoff when they take different sides.
At Elaine's urging, Jerry settles the score with Mike over being called "phony", finally freeing himself, out of everyone, from the unending standoff. However, when he gets home, the match is over.