Wow ... mega thread. Morality conundrums always generate a lot of traffic. [Inappropriate comment removed].
1) None of us were at the table. We have no idea what the DM said or how it was said.
2) We don't know the paladin's alignment, all we know is oath of the ancients with one level of warlock, we don't know the pact or any additional constraints.
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3) All we know is:
- that the paladin was carrying an NPC to safety.
- He was stopped by an Adult dragon
- the dragon wanted the NPC and offered to let the paladin live if he handed the NPC over.
- The paladin decided to give up the NPC.
- The OP mentioned something about hoping the character would stand up to the dragon.
- the OP wants to know if the paladin acted against his beliefs and should be punished for it
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4) The possible reactions on the part of the character are:
a) fight (and die, losing both the NPC and the character) [this is the usual result of fighting an Adult dragon on your own]
b) give up the NPC and trust the word of the dragon [this may or may not be reasonable depending on whether you believe dragons will keep their word]
c) try to talk your way out of it [this is the only approach that has a possibility of saving both the NPC and the character]
5) The character decided to give up the NPC.
- the validity of this decision depends on information we don't know
- did the DM portray the dragon as DEMANDING the NPC be handed over? Did the DM make it look like the dragon would not negotiate under any circumstances? DId the DM make it clear that even trying to negotiate would be interpreted as a refusal to turn over the NPC and result in the death of both? [We have no idea since we weren't there]
- did the DM portray the dragon as ASKING for the NPC? Did the DM give any reason why the dragon might have considered sparing the paladin?
IF the character perceived the situation as deadly and that any other action (including talking) other than handing over the NPC was going to trigger an attack by the dragon then handing over the NPC was reasonable since it preserves the life of the paladin in a situation where there was NO other choice.
On the other hand, if the character/player realized that there might be room to talk and negotiate and perhaps preserve the life of the NPC as well as his own then the paladin should probably have tried talking first before giving up the NPC.
I think these are the two most commonly expressed points of view in this thread. However, NONE of us were there and the OP has not provided sufficient detail (intentionally?) for it to be reasonably resolved.
It all comes down to how the player/character interpreted the scene as set by the DM. Giving up the NPC doesn't break the oaths of an ancients paladin since preserving the light is one of the oaths and sometimes a character is forced to choose which tenets to follow if they can't follow them all simultaneously. The 5e paladin is very different from earlier editions and self-preservation is a valid choice in most of the oaths.
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In any case, even choosing to just hand over the NPC without negotiation, given the overwhelming threat involved, doesn't necessarily invalidate the oath of the paladin. In addition, the OP mentioned some world saving story line in which the paladin plays a role. Dying to a dragon could have very negative consequences for many creatures if it results in the failure of the paladin to prevent whatever is going on. This brings the entire greater good argument into the decision. Does the paladin risk his life further by trying to stand up to an unbeatable foe and potentially doom many others if he dies and can not complete the quest? Or does he give up the NPC avoiding the risk in order to save more later?
Again, we don't have enough information from the OP to make an informed decision, but given the little we do have, I would not say that the paladin broke his oath taking the actions outlined by the OP.
P.S. Whether the DM had a "clear win" in mind or not is irrelevant since the PC only has the information provided by the DM to act on. If the DM presented the dragon as being unwilling to negotiate (and we have no idea how it was presented) then the PC has no choice but to base their actions on their perceptions and what the DM says rather than some mythical "clear win" solution that the DM may or may not have in mind.