I have the latest patch installed, and just got this trait tonight.
My knight was level 7 at the beginning, which goes along with the "must be level 5+ to start" thing that others have said.
He bestowed the favor on the fair maiden in the banquet hall. He bought his own gear instead of sending the squire, and challenged the Count of Tredony to a duel rather than brawl him.
He won the duel against the Count of Tredony, but was defeated by the Guru in the second battle. I made sure he equipped the gear from the village that he was given for these fights. (He actually had better gear, but I wasn't sure if using the quest items made a difference.)
Even after being defeated, he was still asked to help with the black knight, which surprised me. I went ahead and had him sleep since it was late, and equipped his regular gear (legendary quality Lord's Plate and a Longclaw from the Crab Bandit quest) to deal with the knight. He defeated him pretty easily. By now he was level 8, bordering on 9.
When he defeated the knight he got to pick a legendary trait.