After reading Pascal Denault's The Distinctiveness of Baptist Covenant Theology: A Comparison Between 17th Century Particular Baptist and Paedobaptist Federalism, I decided to collect my thoughts and make some chapter-by-chapter observations. You can find my post on the Introduction here and Chapter 1 here. For a general overview of the covenants found in the Bible, see my post on Redemptive History here. Now let's look at Chapter 2 called 'The Covenant of Grace'.
I can do no better than quote Mr. Denault at length regarding the Presbyterian view of the Covenant of Grace:
"...all paedobaptists considered that the children of believers had God as their God, at least in an external fashion, under the administration of the Covenant of Grace...Because no man has been saved other than through the grace of God since the fall, the reformed considered that there had only one Covenant of Grace in the whole history of redemption. The Covenant of Grace was the substance by which seventeenth-century theologians united the Bible from whence came their paradigm: one covenant under several administrations. In establishing a distinction between the internal substance and the external administration of the Covenant of Grace, the Presbyterians managed to maintain the unity of this covenant while admitting a certain disparity between the different administrations. What is more, by separating the substance and administration, the paedobaptists introduced a notion of mixed nature with the Covenant of Grace by which they explained that "unconverted" people could be in the covenant without taking part in its substance while being hermetically contained in its administration. Finally, in considering the Old and New Covenants simply as administrations of the same covenant by insisting on the identity of their substance, the paedobaptists perpetuated a principle given to Abraham: "I will be your God and the God of your posterity." This principle allowed the paedobaptists to consider their children as members of the Covenant of Grace and, by making the distinction between the substance and administration, they justified a legitimate place for them: that of the unregenerate who participate nevertheless in the Covenant of Grace and who receive the seal: formerly circumcision now baptism.
...Presbyterian federalism extended the reach of the death of Christ to all the members of the covenant, but limited it salvific efficacy to the elect. Consequently, Presbyterian federalism was comparable to Arminianism, but limited to the Covenant of Grace."
The 1689 federalism can be summarized as one covenant revealed progressively and concluded formally under the New Covenant:
"Benjamin Keach, one of the main Baptist theologians of the second half of the seventeenth century, ratifies this view of the Covenant of Grace when he describes its four sequences: 1. It was first decreed in past eternity, 2. It was secondly revealed to man after the Fall of Adam and Eve, 3. It was executed and confirmed by Christ in his death and resurrection, and 4. It become effective for its members when they are joined to Christ through faith.
...Baptists considered that no other covenant, besides the New Covenant, was the Covenant of Grace. They still recognized that the Covenant of Grace had been revealed under all the covenants since the fall, but distinguished between the actual substance of these covenants and the Covenant of Grace itself."
"And this I say, that the covenant, that was confirmed before of God in Christ, the law, which was four hundred and thirty years after, cannot disannul, that it should make the promise of none effect. For if the inheritance be of the law, it is not more of promise; but God gave it to Abraham by promise," (Gal. 3:17-18).