Go to the Courtyard and speak with the Knight standing at the Eastern staircase.
He has a letter from a Lizardman challenging him to a one-on-one duel.
Elza can either:
行ってみる -> Go and see.
ほうっておく -> Ignore it.
If he goes to check it out, he arrives at the Cliff Road to find a Lizard riding on a Gurg Beast. Knock the Lizard off the beast, steal his ride and then use it to trample the rest of the lizard reinforcements. Press and Hold A to make the Gurg Beast run and squish things.
(Whatever happened to the one-on-one duel!?)
After stomping enough of them, the lizards will retreat and Elza gets his reward.