Dialogue 1: The Basics

In the third year of my undergraduate Creative Writing degree, I was taking an Advanced Fiction module with a large group of others. As we were sharing our writing with each other, it came to the professor's attention that a lot of people were struggling with dialogue - and not just the advanced stuff. No, these final year undergrads were struggling with the basics.
So that's where we'll start. With the basics.

What is Dialogue?

The Oxford English dictionary defines dialogue as:

Dialogue (/ˈdʌɪəlɒɡ/), noun: Conversation between two or more characters in a literary work; the words spoken by the actors in a play, film, etc. Also: the style or character of the spoken elements of a work.

by OpenClipart-Vectors

(Actually, it has several definitions of the word 'dialogue', but this one is the most relevent to our interests.)

I would argue that dialogue (in a purely mechanical, formatting sense) could also cover words a character speaks whilst alone. Thoughts, rather than spoken speech, often have their own formatting, however, so I will cover those in a later article.
In a piece of writing, there are two different types of dialogue you need to be concerned about: direct dialogue and indirect dialogue.

Direct Dialogue

Direct dialogue records a conversation word for word. This is probably the form of dialogue most familiar to readers, and the one we use most in our writing. It can be an extremely useful tool for both character and plot development.

"Good morning."
"Hey," Clara said. "Sorry I'm so late. Traffic."

Indirect Dialogue

Sometimes called 'reported speech', indirect dialogue summarises a conversation in one or two sentences. This is useful for mundane or less important conversations that don't need to be quoted word for word.

They exchanged greetings and Clara apologised for being late.

When deciding which type of dialogue to use, ask yourself the following questions:
1) Does the conversation further the plot?
2) Does the conversation reveal something about the characters involved?
If the answer to either of these questions is 'yes', direct dialogue is usually the way to go. If the answer to both is 'no', ask yourself if a summary of the conversation would serve the same purpose. So-called 'small talk' is often best summarised, though of course there are exceptions.

Punctuation

In English, direct dialogue is surrounded by quotation marks. Most often, these are double quotation marks, though in some published works you will see single quotation marks being used. Which one you use makes no difference, as long as you are consistent throughout the whole work. Personally, I use double quotation marks in my fiction writing, as I associate single quotation marks with academic work and quoting passages from books.
Other languages have different formatting norms for writing dialogue. For example, French authors often use guillemets (») around sections of dialogue including one or more speakers (with dashes (-) to indicate new speakers), as well as a mixture of indentation and italics. If you write in a language other than English, what I say here might not apply to you.

The most important rule for formatting dialogue is that every time a new person speaks, start a new line. If another character does an action in the middle of someone's speech, put that on a new line. This is to help the reader keep track of who's speaking and cuts down on the use of dialogue tags (more on those later).
For example:

"I don't understand what you're saying," Adam said, wringing his hands.
Roger didn't reply, continuing to pace the room.
"Please," Adam continued. "I need to know what happened."
"It's classified."

Commas, Full Stops, and Capitalisation

One of the things I see writers struggling the most with is whether to use a comma or a full stop (also known as a period) in dialogue. If the line of dialogue is the whole sentence, use a full stop (or a question mark or exclamation mark) at the end. Always place the punctuation inside the quotation marks.

"I don't love you."

"What are you doing?"

If your line of dialogue is followed by a dialogue tag, use a comma. Never capitalise the pronoun or verb here, but still capitalise proper nouns such as names. The comma can be switched out for a question mark or exclamation mark without a difference in rules.

"I don't love you," said Anna.

"What are you doing?" he asked, trembling.

If another line of dialogue follows this tag, capitalise the beginning.

"I don't love you," said Anna. "It's over."

"What are you doing?" he asked, trembling. "Please."

If a line of dialogue is followed by action, a full stop (or question mark or exclamation mark) is used inside the dialogue tag and the action sentence is capitalised.

"I don't love you." She turned away.

"What are you doing?" He squeezed his eyes shut.

The rules are similar if you use the dialogue tag or action first. A comma follows a dialogue tag, whereas a full stop follows an action sentence.

Anna said, "I don't love you."

He squeezed his eyes shut. "What are you doing?"

All of these rules can be combined into longer and more complicated pieces of dialogue, as long as you remember to use a new line for each speaker.

"I don't love you," said Anna, her voice cold. She turned away. "It's over."
"What are you doing?" he asked, trembling. He squeezed his eyes shut as tears threatened to fall. "Please."

Addressing Others in Dialogue

If a character is directly addressing someone in dialogue, always place a comma before or after their name, depending on the sentence structure. If the name is in the middle of a sentence, this means you place a comma both before and after the name. It does not even have to be a proper name - an honorific or a pet name also count as names.

"I don't know what you're talking about, Greg."

"Just so you know, love, you're a real saint."

Interrupting Dialogue (And Complicating Things)

Characters aren't always polite enough to make formatting easy. Whether they are interrupting each other, themselves, or getting distracted mid-speech, sometimes the punctuation situation is slightly more complicated.
If a character is interrupted by another character or by an outside force, you can cut of their dialogue with an em rule (or em dash) (—) to indicate an abrupt stop. Words can be broken off in the middle, but think carefully about the sounds and where it would make sense to interrupt. For example, you wouldn't cut off a word like 'church' off at the 'c', but at the 'ch'.

"I just wanted—"
"Shut up!"

"There's noth—"
A loud crash echoed through the house.

If dialogue slowly trails off, ellipses are used instead.

"I don't know..." The words stuck in his throat.

"But I thought..." Her voice trailed off.

Next Time...

Dialogue is something that seems simple, but it can make or break a book. In the next article, we will be looking more at dialogue tags, the word 'said', and the much-maligned adverbs.