The Westminster Confession of Faith
Chap. VII. -- Of God's Covenant with Man

[Also see:  WCF 8:6; 9:1-5; 19:1-7; 20:1; 25:1-2; 27:5; 32; 33; WSC 12, 16, 20, 40; WLC 20, 22, 30-36, 92, 93, 97]

I.  The distance between God and the creature is so great, that although reasonable creatures do owe obedience unto him as their Creator, yet they could never have any fruition of him as their blessedness and reward, but by some voluntary condescension on God's part, which he hath been pleased to express by way of covenant.[1]

1.  Isa. 40:13-17; Job 9:32-33; 22:2-3; 35:7-8; Psa. 113:5-6; Luke 17:10; Acts 17:24-25

Creation (7:1) -- Every relationship with man is based upon a "covenant."

II.  The first covenant made with man was a covenant of works,[2] wherein life was promised to Adam; and in him to his posterity,[3] upon condition of perfect and personal obedience.[4] -- See SC 12, 40; LC 92, 93 -- Moral Law (Cov. of Works) -- Quotes Rom. 2:14-15; 10:5; Also LC 20, 22, 97

2.  Gen. 2:16-17; Hosea 6:7; Gal. 3:12 -- Quotes Lev. 18:5
3.  Gen. 3:22: Rom. 5:12-20; 10:5 -- Quotes Lev. 18:5
4.  Gen 2:17; Gal. 3:10 -- Quotes Dt. 27:26

Covenant of Works/Life/Creation:

a.  Made w/ Adam (Federal Head of whole human race -- posterity) -- whatever Adam chooses to do will affect whole human race.
b.  Promised Life -- Eschatological -- glorified -- cannot fall -- confirmed righteousness
c.  Conditional Covenant -- requires perfect & personal obedience by Adam -- continues on until end of this present age -- extends all the way to the final judgment and is the basis for the final judgment (Matt. 25:34-46; Rev. 20:12).

III.  Man, by his fall, having made himself incapable of life by that covenant, the Lord was pleased to make a second,[5] commonly called the covenant of grace; wherein he freely offereth unto sinners life and salvation by Jesus Christ; requiring of them faith in him, that they may be saved,[6] and promising to give unto all those that are ordained unto eternal life his Holy Spirit, to make them willing, and able to believe.[7]-- Also see SC 16, 20; LC 22, 30-32.

5.  Gal. 3:21; Rom. 3:20-21; 8:3; Gen. 3:15; see Isa. 42:6
6.  John 3:16; Rom. 10:6, 9; Rev. 22:17
7.  Acts 13:48; Ezek. 36:26-27; John 6:37, 44-45; I Cor. 12:3

IV.  This covenant of grace is frequently set forth in Scripture by the name of a testament, in reference to the death of Jesus Christ the Testator, and to the everlasting inheritance, with all things belonging to it, therein bequeathed.[8] - Also see LC 36.

8.  Heb. 9:15-17

The Fall -- This starts R.H. -- Covenant of Grace -- How do we get here?

How is the Covenant of Grace accomplished?

a.  Begins in eternity with the Covenant of Redemption [WCF 8:1; John 6:38-40; 17:4-12; Eph. 1:4ff.; 3:11; 2 Tim. 1:9; 1 Pet. 1:19-20 -- Ps. 2:7-9; 40:7-8 -- see Heb. 10:5-7] -- Covenant of Works -- Made in eternity between God the Father [Trinity] who makes a covenant of works w/ Son of God [Federal Head of the Elect; Rom. 5:12-21; 1 Cor. 15:22; Heb. 7:22].  The Eternal Son of God would take on a human nature and live perfectly under the Law of God and die for the sins of the Elect.

This Covenant (of Redemption/Works) is actually the archetype of the Covenant made with Adam as a type/picture to be fulfilled in Christ.  Covenant with Adam is a picture of the Eternal Covenant and points forward to Christ.

b.  This Covenant also makes the Covenant of Grace possible -- In the fullness of time (Gal. 4:4-5; 1 Pet. 1:19-20) the Son of God takes on a human nature (2nd Adam) and comes under the covenant of works and fulfills all of its stipulations for the elect unlike the 1st Adam.

c.  In fulfilling the Covenant of Works for God's Elect, the Covenant becomes for the elect a covenant of grace in which now the promises are received by faith alone.  This is the one covenant of grace that unifies R.H. by which all the elect are saved.  This one covenant which begins with Christ complete work casts its redemptive and gracious shadow all the way back to Adam (Gen. 3:15) and is formally ratified to Abraham (Gen. 12 & 15; earthly father of elect). 

These two covenants (works and grace) run throughout redemptive history to unify the one plan throughout the Scriptures.  We must clearly distinguish between these two words/covenants of Scripture (Law and Gospel): 

The Law demands that man perfectly obey the commandments to be saved (Rom. 2:12-16; Matt. 7:21-23; 19:16-17ff; Gal. 3:10, 12; Rom. 10:5; Lev. 18:5).  The unbeliever continues to be judged by his failure to keep the covenant of works and therefore stands in constant judgment before God. 

The Gospel doesn't command or required anything of man but proclaims that the righteousness that God requires in the Law has been met by Him and His righteousness is given freely through faith alone (Rom. 3:21-26; 4:1-8; 8:1-4; 10:1-10; Gal. 2:15-21; 3:1-4:7; etc.), which is even the gift of God ("I will be your God and you will be my people").  The believer is saved only by grace by means of the covenant of grace (Gospel).

Luther wonderfully describes the two:

Now the first sermon, and doctrine, is the law of God. The second is the gospel. These two sermons are not the same. Therefore we must have a good grasp of the matter in order to know how to differentiate between them. We must know what the law is, and what the gospel is. The law commands and requires us to do certain things. The law is thus directed solely to our behavior and consists in making requirements. For God speaks through the law, saying, "Do this, avoid that, this is what I expect of you." The gospel, however, does not preach what we are to do or to avoid. It sets up no requirements but reverses the approach of the law, does the very opposite, and says, "This is what God has done for you; he has let his Son be made flesh for you, has let him be put to death for your sake." So, then, there are two kinds of doctrine and two kinds of works, those of God and those of men. Just as we and God are separated from one another, so also these two doctrines are widely separated from one another. For the gospel teaches exclusively what has been given us by God, and not - as in the case of the law - what we are to do and give to God (Luther, How Christians Should Regard Moses, 1).

V.  This covenant was differently administered in the time of the law, and in the time of the gospel:[9] under the law, it was administered by promises, prophecies, sacrifices, circumcision, the paschal lamb, and other types and ordinances delivered to the people of the Jews, all foresignifying Christ to come;[10] which were, for that time, sufficient and efficacious, through the operation of the Spirit, to instruct and build up the elect in faith in the promised Messiah,[11] by whom they had full remission of sins, and eternal salvation; and is called the old testament.[12] -- Contra Dispensationalism. -- Also see LC 33-34.

9.  II Cor. 3:6-9
10. Heb. 8-10; Rom. 4:11; Col. 2:11-12; I Cor. 5:7
11. I Cor. 10:1-4; Heb. 11:13; John 8:56
12. Gal. 3:7-9, 14; Psa. 32:1-2, 5

VI.  Under the gospel, when Christ, the substance,[13] was exhibited, the ordinances in which this covenant is dispensed are the preaching of the Word, and the administration of the sacraments of baptism and the Lord's Supper:[14] which, though fewer in number, and administered with more simplicity, and less outward glory, yet, in them, it is held forth in more fullness, evidence and spiritual efficacy,[15] to all nations, both Jews and Gentiles;[16] and is called the new testament.[17] There are not therefore two covenants of grace, differing in substance, but one and the same, under various dispensations.[18] -- Also see LC 35.

13. Col 2:17
14. I Cor. 1:21; 11:23-25; Matt. 28:19-20
15. Heb. 12:22-24; II Cor. 3:9-11; Jer. 31:33-34
16. Luke 2:32; Acts 10:34; Eph. 2:15-19
17. Luke 22:20
18. Gal. 3:8-9, 14, 16; Rom. 3:21-22, 30; 4:3, 6-8, 16-17, 23-24; 10:6-10; Heb. 4:2; Gen. 15:6; Psa. 32:1-2; I Cor. 10:3-4

Covenant of Grace covers the entire period of R.H. (redemptive -- post fall; not beginning at creation). -- Yet two general periods of R. H.:

a.  Under Law -- even under the law, the covenant of grace is still present.  The Law does not destroy the promise.

b.  Under Gospel

What is "Under Law" -- refers to not properly to entire OT, but to primarily to the Mosaic Covenant which is a republication or picture of the original covenant of works made with Adam (added to Abraham -- Gal. 3:17-18; cf. WCF 19:6; WLC 97; John 1:17).

What is the purpose of the Mosaic Covenant "Under Law"/Old Covenant? 

If you're going to plan a big event you want to do all the necessary preparation to make the event a success.  These are the days prior to God sending His own Son into the world.  How does God awaken mankind to their sin and need for Christ?  He gives them a picture of what they look like before him.  It is as if He says, "If you want to know what you (all mankind) look life before me, look at Israel!" 

In order to intensify the need for salvation in Christ, God graciously chooses Israel (in fulfillment of promises made to Abraham), redeems them by grace, and forms them into a nation (Ex. 19:6).   He makes a covenant of works with the nation as a whole.  Israel is a picture of all mankind under Adam (original state).  This national covenant is a republication of the original covenant of works (Adam) and is added to the one covenant of grace made with Abraham (Gal. 3:17).  Why? (Remember that Israel is simply a picture of the fallen condition of all men under the Adamic Cov.).

a.  To awaken man's awareness to the presence of sin (Rom. 3:20; 7:7-11; 8:1-4).
b.  To intensify man's sin (Rom. 5:20; 7:5)
c.  To ultimately drive man to Christ (Gal. 3:23-25).

Result:  All mankind stands condemned before God (Rom. 3:19-20)

Salvation:  Rom. 3:21-26 -- Though Faith Alone in Christ.