Let's begin with a description of the biblical doctrine of the two covenants of works and grace.
The Covenant of Works was a bond made between God and Adam and his descendants. This covenant offered blessing for keeping God’s moral law, specifically of Adam not to eat of the tree of knowledge and punishment for his disobedience. Genesis 3 describes this Covenant that God made with Adam. After Adam disobeyed God and ate of the tree then God made another Covenant with him which we call the Covenant of Grace. This is also found in Genesis 3. The Covenant of Grace stated that God would punish Adam and his posterity for disobeying but that he would send a redeemer that would crush the head of satan. This new Covenant of Grace would be dependent upon man’s faith that God would carry out the Covenant. This Covenant of Grace had certain elements and characteristics.
Elements of the Covenant of Grace
The parties to this Covenant of Grace are God and the people whom he will redeem. Christ fulfills a special role as “mediator” (Heb. 8:6; 9:15;12:24) in which he fulfills the conditions of the covenant for us and thereby reconciles us to God.
The condition (or requirement) of participation in the covenant is faith in the work of Christ the redeemer (Rom. 1:17; 5:1). This requirement of faith in the redemptive work of the Messiah was also the condition of obtaining the blessings of the covenant in the Old Testament, as Paul clearly demonstrates through the examples of Abraham and David (Rom. 4:1-15). They, like other Old Testament believers, were saved by looking forward to the work of the Messiah who was to come and putting faith in him.
The promise of blessings in the covenant was a promise of eternal life with God (Gen.17:7; Rev.21:3). The sign of this covenant (the outward, physical symbol of inclusion in the covenant) varies between the Old Testament and the New Testament. In the Old Testament the outward sign of beginning the covenant relationship was circumcision. The sign of continuing the covenant relationship was continuing to observe all the festivals and ceremonial laws that God gave the people at various times. In the new covenant, the sign of beginning a covenant relationship is baptism, while the sign of continuing in that relationship is participation in the Lord’s Supper (see Colossians 2:11-15; I Corinthians 11:17-33).
Characteristics of the Covenant of Grace
It was Trinitarian in that God the Father, Son and Holy Spirit would carry out the Covenant together. God the Father elects, God the Son redeems, and God the Holy Spirit would apply the redemption and seal salvation.
This was an eternal covenant that would last forever. It was a particular Covenant between God and his elect, meaning those particular people that he elected unto salvation by no merit on their own but completely by his free act of grace and mercy. It was a gracious Covenant in that man did not deserve it or have any merit in accomplishing it or carrying it out. And it was one Covenant carried out in different epochs (dispensations) of history.
Biblical Overview of Covenant Theology
We see the Covenant of Grace unfold throughout the Scriptures after Adam, first with Noah (Gen 6-10). God saw all the evil on the earth and decided to wipe it out, saving Noah and his family. So God’s Covenant of Grace continued to unfold in his saving Noah and giving Noah the sign of the rainbow, that He would not destroy the world through a flood again. After Noah came Abraham. In Genesis 12 God says to Abraham that he will be a great nation. In Genesis 15 the Covenant of Grace unfolds as God tells Abraham that “I will be your God and you will be my people”. In Genesis 17 God gives Abraham the sign of the Covenant of Grace through circumcision, a bloody rite that would foreshadow the blood sacrifice that Jesus the Redeemer would eventually bring. Abraham believed God and his promises and it was counted to him as righteous. So Abraham was saved by faith by looking forward to the redeemer. After Abraham came the covenant with Moses. Moses was God’s chosen man to lead the nation of Israel out of Egypt. The Covenant of Grace continues to unfold as God sees the misery of His people and saves them by miraculously bringing them out of Egypt and leading them to the promised land. God confirms the Covenant of Grace with His Law which he gives to Moses and the people in the Ten Commandments in Exodus 20. After Moses, God continues to confirm the Covenant of Grace through David, the King of Israel. In II Samuel 7 God confirms the Covenant of Grace with David by telling him that he will have an everlasting Kingdom. Jesus the redeemer will ultimately come from the line of David and reign forever, just as God promised. After David, the prophet Jeremiah prophecies about the New Covenant in Jeremiah 31, again, pointing forward to how God will redeem his people, bring forgiveness of sins and write his law on their hearts.
Finally, as Jesus, the Son of God, comes to earth, lives a perfect life, perfectly obeying the law, dies on the cross, rises from the dead and sits at the right hand of God, the Covenant of Grace is fulfilled. All the stipulations of the Covenant of Grace are met in Jesus our Redeemer. God’s elect are secured in salvation for eternity. Hebrews 7-8 help us understand how Jesus ushers in the new covenant. The sign of the covenant in the New Testament is baptism (Colossians 2). Now that Jesus has shed his blood once for all the bloody rite of circumcision is replaced by baptism signifying our washing in rebirth and renewal by the Holy Spirit.