This quest can be acquired from various settlements throughout Calradia. It is a repeatable quest, and usually found in small villages, offered by the headman of the village.
Note: There is a time limit of 5 days to complete this quest. You should therefore escort the herd to the specified settlement as soon as possible to avoid any delays on the road.
You have the option of escorting the herd to a nearby settlement yourself, or you can send one of your companions along with a small number of men (usually two or three) to do it for you. If you choose the latter you will be free to pursue whatever you were previously doing if you're pressed for time, but success is not guaranteed if you're not there to ensure it.
Warning: In addition to the chance of failure when you give the task to your companion, there is also a chance that the companion will permanently leave your clan, taking the herd and associated profits for themselves. This chance is greatly increased if you have poor relations with the chosen companion.
Once you've accepted the quest and left the village, you will notice that the sheep have been added to your inventory automatically, assuming you have chosen to escort them yourself. If you haven't, you will be able to see your companion on the map. They will begin to move the sheep to the specified settlement as soon as time resumes (either as you move throughout the map, or wait in a settlement).
When you have arrived at the settlement where you need to deliver the herd, you should be able to see the relevant NPC, who you've been asked to provide the sheep to, shown in the menu at the top right of the screen. You can choose to speak with them from this menu to be transported directly to them.
At this point you will have the option to keep the sheep for yourself. While they are worth more than the reward of 400 denars that you would otherwise receive from the quest giver, keeping them will result in a significant decrease to your relations with both merchants involved. This can negatively impact your purchasing power in the region, so it is recommended that you keep these merchants happy. Taking the sheep will also be reported as a crime, which may result in local authorities hunting you.
Whatever you choose, once you have spoken with the merchant and informed him of your decision, the quest will complete.