The covenant of grace is a theological phrase that describes the covenant relationship that exists between every justified believer and God. The covenant of grace begins in Genesis 3:15 where God promises to undo the damage caused by the sin of man by conquering the one who deceived him through a descendant of Adam and Eve. This promise of salvation was fulfilled in Jesus Christ who crushed Satan under his feet through his death on the cross. Adam and Eve were saved by believing this message and God clothed them in animal skins to demonstrate his forgiveness and the covering over of their sins by means of a blood sacrifice. God entered into a covenant relationship with them after the breaking of the first covenant where he promised to forgive all their sins, give them a new heart, put his Spirit within them, and make them his people (Jer 31:31-34; 32:40; Eze 36:25-27). Some other verses related to the covenant of grace include Psalm 25:14; Isaiah 54:10; 55:3; 59:20-21; 61:8; Jeremiah 50:4-5; Zechariah 9:11; Hebrews 8:8-12; 10:14-17; 13:20.
Every believer throughout history is in this covenant which translates them from being under condemnation for their sins to being forgiven and adopted into God’s family. They are no longer under the covenant of works relating to God as a stern judge who must punish them for their sins, but they now relate to God in terms of grace and God is their loving Father. They are no longer under the condemning power of the law because their relationship to God has changed to one of grace and forgiveness. That is what Paul means in Romans 6:14 when he says, “For sin will have no dominion over you, since you are not under law but under grace.” They are under the reign of God’s grace instead of the reign of sin and death through the law’s power over them. They no longer relate to the law as a covenant of works that they must perfectly obey in order to be saved because Christ has perfectly obeyed it in their place. Christ fulfilled the requirements of the covenant of works (God’s perfect righteous standard) when Adam failed to. Now we relate to God in terms of unmerited favor because of what Christ has done rather than being condemned for our violation of God’s law because Jesus paid the penalty for our sins. Christ both lived for us in his active obedience and died for us in his passive obedience.
This covenant of grace does not just exist between God and New Testament saints, but with those who lived before Christ. Isaiah 55:3 says that God will make a covenant with everyone who turns to him: “Incline your ear, and come to me; hear, that your soul may live; and I will make with you an everlasting covenant, my steadfast, sure love for David.” This covenant with every repentant believer is of the same nature as God’s covenant with David in 2 Samuel 7:16 which cannot possibly fail to be accomplished. The covenant of grace with every believer is unilateral which means that God takes responsibility to see its fulfillment and therefore is unconditional and unbreakable. The covenant of works, on the other hand, is bilateral, conditional, and breakable as in the covenant with Adam and the Mosaic covenant: “my covenant that they broke” (Jer 31:32). The covenants with Noah, Abraham, David, and the New Covenant are covenants of grace because they are unbreakable and kept by God alone. That is why these covenants have been referred to as administrations of the covenant of grace started in Genesis 3:15 and because they mark God’s unfolding redemptive plan to redeem a people for himself.
The difference between the New Covenant of Hebrews 8 and the covenant of grace is that while the New Covenant did not come into existence until the death of Christ, the covenant of grace has existed since Genesis 3:15. The blessings of the New Covenant (knowing God, having the law written on the heart, and the forgiveness of sins) are the same as the blessings of the covenant of grace. But while all of those in the New Covenant know God, only some of those who were under the Old or Mosaic Covenant knew God. Old Testament saints had these blessings, but not all in Israel had them. Israel was a mixture of both the saved and the lost whereas the church is only made up of those who are saved. Of course, there are many local churches where not everyone who is a member is saved – but it should not be that way. The pattern we are given in the New Testament is one of regenerate church membership.
The only people who have ever been partakers of the covenant of grace are those who have been saved and know God. As Herman Witsius (the chief proponent of Covenant Theology) has said, “We are first of all to consider those benefits which belong to the covenant of grace, taken absolutely and in itself, and therefore common to all those in covenant . . . we enumerate the following in order: 1. Election. 2. Effectual calling to the communion of Christ. 3. Regeneration. 4. Faith. 5. Justification. 6. Spiritual peace. 7. Adoption. 8. The Spirit of Adoption. 9. Sanctification. 10. Conservation, or preservation. 11. Glorification.” (The Economy of the Covenants between God and Man, 1:325) and “in the covenant of grace are promised both salvation itself, and all the means leading to it” (The Economy, 1:283). Those who believe in infant baptism have misused Covenant Theology to support their beliefs when it was originally a soteriological system, not an ecclesiological one. The infant children of Israelites were partakers in the external economy of the covenant of grace or outward administration of it without being members of the covenant of grace until they received the forgiveness of their sins. It does not follow that to be a member in the community created by the members of the covenant of grace implies that they are actual partakers of it when the covenant is defined in solely soteriological terms.