Okay, if I'm reading this right, the dragon confronted the paladin with the NPC. The paladin attempted to placate the dragon by explaining his mission. He succeeded on this task. You then had the dragon say, "give me the NPC and you can go, then."
If this is correct, I think there's a few things going on. FIrstly, I'm not sure you made it clear that the new position of the dragon was just a counter-offer and the negotiation was still ongoing. It seems to me that, from the player side, this looks like, "well, I can't beat that dragon, and I just rolled a great persuasion check, and this is where it is." To the player, this looks like what his best effort gets, and so was probably disheartened by the result and figured there was no more room to play. In other words, he played his best, got a good result, and it still resulted in a bad result.
I like to say that, as a DM, it is imperative that you both honor success and honor failure. If you call for/allow a roll, you have to honor the results so your players have a solid idea of what's at stake and that their actions matter. Here, you honored the success, but didn't make it clear that more could be useful. The stakes of the actions were not clear -- you had one idea, the player another. This is a common miscommunication that can be solved by taking a step back in the situations and being explicit about what's at stake -- what a success will look like and what a failure will look like. That way, players can make informed choices instead of having to guess and it also avoids situations like this.
Making a mistake is perfectly fine. I do it all the time. The issue I see that's got some negative reactions in this thread is your presupposition that the player's character must be punished for the results of this mistake. I think that, honestly, mistakes were made on both sides, but if you punish only the PC, then it becomes entirely one-sided -- yours. You've compounded a miscommunicated and misunderstood scenario by punishing only one party in it. I strongly recommend you don't do that. If you need to keep fictional continuity, then have the paladin dream that atonement is needed and that more effort to protect the weak will be expected in the future. Then, or perhaps first, have a frank conversation with the player where you hammer out expectations together -- ie, don't dictate the oath requirements, seek consensus. That way you get to make it a fictionally important moment in your game but avoid doubling down on the mistakes.