I wasnt paying attention and accidently told Cerith and his bandits about the fairy location. Now I'm stuck in a battle with them and keep dying because they are too strong. How do I get past this?

Use the proficiency and the level up points on your pet, after that try to put somes better items on them (if you don't have better stuff try the trade broker). If you loose again try to send them in mission they can level up like that and you got some gold/item in the satchels ^-^

Thank you. They are all leveled and proficiented up. I will check for the broker, thanks!