How did Israel’s response to the Sinai Covenant affect them?
On this occasionally fell out the ruin of that people; “their table became a snare to them, and that which should have been for their welfare became a trap,” according to the prediction of our Savior, Ps. 69:22. It was this covenant that raised and ruined them. It raised them to glory and honor when given of God; it ruined them when abused by themselves to ends contrary to express declarations of his mind and will. For although the generality of them were wicked and rebellious, always breaking the terms of the covenant which God made with them, so far as it was possible they should, while God determined to reign over them to the appointed season, and repining under the burden of it; yet they would have this covenant to be the only rule and means of righteousness, life, and salvation, as the apostle declares, Rom. 9:31-33; 10:3. For, as we have often said, there were two things in it, both which they abused to other ends than what God designed them:
How did the Jews misinterpret the Sinai Covenant’s reference to the Covenant of Works?
There was the renovation of the rule of the covenant of works for righteousness and life. And this they would have to be given to them for those ends, and so sought for righteousness by the works of the law.
In other words, despite God’s reminder that only perfect obedience could merit eternal life, the Israelites tried to make a national covenant promising material & temporal blessings into a new Covenant of Works like the one made with Adam.
How did the Jews misinterpret the ways in which the Sinai Covenant pointed to the Covenant of Grace?
There was ordained in it a typical representation of the way and means in accordance with which the promise was to be made effectual, namely, in the mediation and sacrifice of Jesus Christ; which was the end [purpose] of all their ordinances of worship. And the outward law of it, with the observance of its institution, they looked on as their only relief when they came short of exact and perfect righteousness.
Thus, instead of recognizing that the animal sacrifices pointed toward the reality of Christ’s sacrifice, the Israelites believed that the outward observance of sacrificing the animals (in and of itself) actually obtained forgiveness for their sins.
Why is it important to grasp the true meaning of the Sinai Covenant, instead of misinterpreting it like the Jews did?
Against both these pernicious errors the apostle disputes expressly in his epistles to the Romans and the Galatians, to save them, if it were possible, from that ruin they were casting themselves into. On this “the elect obtained,” but “the rest were hardened.” For by that means they made an absolute renunciation of the promise, in which alone God had enwrapped the way of life and salvation.
This is the nature and substance of that covenant which God made with that people; a particular, temporary covenant it was, and not a mere dispensation of the covenant of grace (Covenant Theology: From Adam to Christ, pp. 198-199).
The Sovereign Logos 