Scriptural terms and expressions may be used to describe a doctrine but this does not necessarily mean the teaching itself is according to Scripture. That there are covenants mentioned in the Bible no-one would deny since a concordance would readily prove that to be the case. However, it is important to realise that two people may use the same words but not necessarily mean the same thing . This has been one way in which Christians have been led astray from the truth.
Now, it must be realised that those who hold to covenant theology regard those who embrace dispensational teaching to be in error. It is important to realise that covenant theology and dispensational teaching are two distinct and mutually exclusive systems of doctrine. A lot of truth falls or holds together within them. It is impossible to select various parts to pick and mix. Matters at stake are doctrines involving the righteousness of God, justification, the believer in relation to the law, the distinction between the church and Israel, whether or not the church began at Pentecost or from Abraham (or Adam?), the rapture, whether or not the church will pass through the tribulation, future events as to the Jews and the restoration of Israel, the millennium, whether two resurrections or a general one and final judgment at the return of Christ. Indeed the list is almost endless.
None of this is an attempt to convey the idea that those who hold to covenant theology are astray on such important matters as the divine inspiration of the Bible and its authority, God the Holy Trinity, the deity of Christ and His eternal Sonship, the incarnation and virgin birth, His impeccable humanity, the personality of the Holy Spirit, the creation of man, sin and the fall, the necessity of atonement  , the bodily resurrection of Christ, and that justification  is by faith in Him alone. Indeed these and many other important truths, thankfully, are held by covenant theologians just as much as by those who hold to dispensational teaching.
It should be pointed out that there are variations within this system of theology, and some of parts of this article in reviewing it may not be held by all who hold to covenant theology. This theology had much influence in the doctrinal basis of the Westminster Catechism written in the 17 th century at the time of the English Civil War, and this also has been referred to for some aspects of this review.
Covenant theology is based around the concept that there are three main covenants in the Bible. One is between the persons of the Godhead; the other two are man-ward. They are: 1) the Covenant of Redemption  , 2) the Covenant of Works, and 3) the Covenant of Grace.
The Covenant of Redemption is a covenant made in eternity between the persons of the Godhead, God the Father, God the Son, and God the Holy Spirit, that would involve the Son becoming man and, through His sacrificial work at the cross, being the redeemer for fallen mankind, or, at least, and this is significant, for the elect as given to the Son. This leads to the error of a limited atonement for the elect only. It is said that the Father designed it, the Son would undertake it and the Spirit would apply its results.
The Covenant of Works is a covenant God made with Adam before the fall that promised life to him if he was obedient to Him in it. Adam failed in his obligation since he disobeyed, and broke the covenant. He sinned therefore, and brought in condemnation and death to all mankind who he had represented.
The Covenant of Grace promises salvation and eternal life to those who place their faith in the Lord Jesus Christ. Other covenants, such as the promise of the redeemer immediately following the fall in Genesis 3, the one with Noah, the Abrahamic, the Mosaic (the law), the Davidic, and the new are included in the Covenant of Grace. This may look in some points similar to that held by dispensationalists. However, there are important differences, as may already be observed, when the system is developed. An aspect of covenant theology is that Christ obeyed the law for His people — ‘the elect' — and that the obedience of Christ has two parts. These are His ‘passive obedience' in which He suffered on the cross and His ‘active obedience' in which He kept the law in His life.
Covenant theology is based particularly on Romans 5:12–21 where Adam and Christ are compared (and contrasted) as heads of their respective races  . There is seen in it a unity between Adam and his race which is to be compared with that of Christ and those who are His. The Covenant of Works, it is said, was made with Adam as federal head and involves all his posterity as being in union with him. Hence, unregenerate men stand as one with Adam and therefore sinned in him, and his first sin, his disobedience, is imputed to them. This is often called ‘original sin'. By direct comparison with this, it is claimed that, through the Covenant of Grace, the righteousness of Christ, His obedience, is imputed to those (the elect) united to Him by faith. This is based on a wrong exegesis of Romans 5:18–19.
The idea of the Covenant of Works is drawn from Hosea 6:7. Romans 5:14 is taken as referring to this verse. The marginal reading states: ‘They like Adam have transgressed the covenant' . However, a wrong inference is drawn from it. Adam was given a prohibition or set a boundary that he was forbidden to cross. It need not imply a covenant as such. Even so, death as the penalty was made clear to him should he disobey. In overstepping the limitation, he transgressed. Adam, therefore, had a law . The question also needed to be asked as regards the reference to Hosea 6:7 is, Who are ‘they'? In the context, ‘they' are the nation of Israel. Israel as a nation had similarly transgressed. This was the law given by God through Moses. The covenant mentioned in Hosea 6, therefore, is not some inferred covenant that God made with Adam on behalf of his posterity, but, rather, His covenant with Israel.
Combining this with the inference from Hosea in Romans 5:14, Adam's first sin, it is argued, is imputed to the race because of their oneness with Adam. Therefore, on the basis of the Covenant of Works, in Adam all men have broken the law. In a comparison made with Hebrews 7:5, all sinned in his loins. It is perfectly true of course that Adam sinned and had fallen before he had any descendants, but the point is that the whole of his race is identified with him as being in the same sinful state that he was now in after the fall. The law, rightly applied, proves this as a fact (see e.g. Rom. 7:7). Please read 1 Timothy 1:7–10.
Another erroneous idea is that Adam would have obtained eternal life if he had been obedient. It is taught in the supposed Covenant of Works that God had said to Adam, ‘This do, and thou shalt live'. God had said nothing of the sort. The word to Adam was effectively, ‘This do, and thou shalt die!' Read what Genesis 2:16–17 actually says! ‘Do and live' was put to the nation of Israel in the giving of the law — the ten commandments. The response of the Lord Jesus to the lawyer's question in Luke 10:25–28 bears this out. Hence the translation ‘justification that brings life' or similar words in some versions of Romans 5:18, instead of ‘justification of life' as in the King James Version and J N Darby translation, is incorrect.
Returning to Romans 5:18–19 in particular, according to covenant theology the expressions ‘the righteousness of one' and ‘the obedience of one' are said to be Christ's righteousness in His life and His obedience in keeping the law. This is called His active obedience. By a reasoning based on the comparison in the verses between Adam and Christ, and on the idea that Adam's first sin is imputed to his race, it then follows that, as Christ kept the law in His life (which no-one disputes, because He did), this constitutes that described by covenant theologians as ‘the righteousness of Christ' which, they say, is imputed to believers for their justification.
As to the basis of justification (Rom. 5:9), the Lord Jesus made atonement in His blood, the solemn evidence of a life given up, in this case judicially, Christ having borne the wrath of God on the cross. However, in covenant theology, this is only the passive obedience of Christ, and does not in itself secure justification for the believer in Christ. It is stated by covenant theologians that He bore the punishment demanded by the Covenant of Works and so suffered the resulting curse on behalf of Adam and his race that had broken it, a misapplication of Galatians 4:5. They also say that, by reason of the Covenant of Grace, Christ, as the appointed federal head of the elect, by His life of perfect obedience, recovered for them the blessings promised to Adam had he not disobeyed. In consequence Christians, that is the elect, on account of their faith in Christ, and by their union with Him, are justified by the righteousness of Christ in keeping the law being imputed to them. It is this imputation of the obedience of Christ that is necessary for justification.
Now the Bible teaches that the obedience of one is that of Christ in going into death. His obedience is one, and cannot be divided into parts. Dividing it into active and passive forms — the one in His life and the other in His death — is an idea that belongs to theology and is not Scriptural. The righteousness of one is the one righteous act  in the laying down of His life (see John 10:18). It is merely a theological system that would have us pardoned by reason of the passive obedience of Christ in death and justified by His active obedience. It is on this basis that believers are justified: ‘justified by his blood' (Rom. 5:9). In other words, the blood of Christ is quite sufficient for the believer in Christ to be justified. Nothing more is needed. The idea of a ‘vicarious life' and of one keeping the law for others is unscriptural: ‘for if righteous is by law, then Christ has died for nothing' (Gal. 2:21).
The Lord Jesus had to die, and He ‘became obedient unto (that is, as far as) death, even the death of the cross' (Phil. 2:8). The obedience of Christ took Him to Calvary where He went under the judgment and wrath of God on account of sins and undertook the work of atonement, laying down His life, with all the value of the atonement in His blood. There is provision for all in the blood of Christ. He ‘gave himself a ransom for all' (1 Tim. 2:6); ‘he died for all' (2 Cor. 5:15). There is no such thing as a limited atonement only for ‘the elect' in Scripture, although it is true that the only persons who get the benefit are believers.
Also, it is reasoned that since Christ is God the righteousness of God is imputed to believers. It can be seen immediately that in this system the believer is justified by law even though someone else — Christ — kept it for him. All this is despite the fact that we are told that the righteousness of God is ‘without the law' (Rom. 3:21). Once justified, the believer in this system then has the law as the rule of life. Yet Christ was ‘made under the law, to redeem them that were under the law' (Gal. 4:4–5). Covenant theologians say that the ceremonial law has been ended in the death of Christ but the believer still has to live by the moral law — the ten commandments. This assumes that such a distinction is to be made. Again, this disregards Paul's letter to the Galatians. Read carefully the latter part of chapter 2, especially verses 19–21.
According to the Bible, believers in Christ ‘are not under the law, but under grace' (Rom. 6:14). They are ‘dead to the law by the body of Christ' (Rom. 7:4). Christ is the life of the believer (Col. 3:4), and ‘we all … beholding … the glory of the Lord, are changed into the same image' (2 Cor. 3:18). The rule of life for the believer is that of a new creation. Christians are to fulfil the law of Christ (Gal. 6:2, 14–16). It has been rightly said, ‘Christ, the second man, is the pattern, and the Holy Spirit works according to that pattern.' The law occupies us with ourselves in our endeavour to keep it. As Christians, the Holy Spirit occupies us with Christ and forms Him in us. One is bondage, the other liberty.
An underlying mistake with covenant theology is to interpret the Bible, particularly the Old Testament, by spiritualising it rather than taking what it says literally. This has to be because it is the only way to make the theological system fit. The beneficiaries of the supposed Covenant of Grace are seen as one. It means that there is no distinction between Israel and the church. Thus, all the promised blessings to the nation of Israel are to be spiritually fulfilled in the church. This means that the church existed throughout Old Testament times. The expression ‘church in the wilderness' in Acts 7:38 has been quoted to prove the idea. J N Darby uses the word ‘assembly' in his translation, a word that in the original language has a wider meaning than church of God or assembly of God. It simply refers to the assembly (in the literal sense of the word) of Israelites who travelled from Egypt to Canaan.
It must be realised that such a short article regarding covenant theology cannot deal with every detail and question it raises. However, these comments may serve to show that it is a system that falls short of giving a proper outline of truth as unfolded in Scripture. It ignores the prophetic programme set out in the Bible, and lacks appreciation of the true nature and calling of the church according to God's eternal counsels, and reinterprets the promises made to the patriarchs concerning their natural descendants — the nation of Israel — with much of the Bible having to be ‘spiritualised' and explained away.
Covenant theologians, however, hold to a ‘limited atonement' in that it was only for the elect. There is also the error that the perfect life of Christ was vicarious in which He kept the law for the elect as that imputed to them for their justification
This is an example of the case where the same word may not carry exactly the same meaning in another system as shall be seen further on.
Not all covenant theologians are agreed as to this first one. Some call it ‘The Eternal Covenant'.
So far, this is true of course. It is the concept of a Covenant of Works that leads into wrong doctrine.
See King James Version margin or the J N Darby translation for Romans 5:18.