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As the template for a comedy style that would come to be known as screwball comedy, The Awful Truth is screwball comedy at its most minimal. The plot is virtually nonexistent as Grant and Dunne engage in a master class on comic technique and timing. They play a married couple soon to be divorced and spend the entire film taking turns busting up each other's dates. That is until they find themselves in cramped overnight accommodations and realize 15 minutes before the divorce decree goes into effect that they really love each other and don't want to get a divorce at all.
McCarey's direction incorporates comedic flourishes hewn to a fine gloss, lessons learned at the feet of Laurel and Hardy when he was their producer and director. And much like a Laurel and Hardy short, The Awful Truth feasts upon the expertise of the two leads to expand basic comedy situations into extended riffs, punctuated by hilarious reaction shots and double takes. And without a hard-nosed genre story to hang these comic turns onto (as in the mystery plot in The Thin Man or the picaresque missing heiress and cynical reporter story of It Happened One Night), the film is a comic high wire act, pure screwball.
Leo McCarey won an Oscar that year as Best Director for The Awful Truth but McCarey, when accepting the award, grumpily addressed the Academy members and complained that he won the award for the wrong movie -- he was expecting one for his sentimental Make Way for Tomorrow (which you've undoubtedly never heard of). But McCarey has always been his best when left unrestrained (see Duck Soup). Although corniness and pretension were in his future (Going My Way, My Son John), as a final belt of pure comedy from McCarey, The Awful Truth is as good as it gets -- straight, no chaser.
He can't handle the truth.