by Philip Melanchthon (from the 1535 Loci Communes), translated by Scott L. Keith, Ph.D. 
The term “Gospel” is extant in the oldest Greek authors. In Homer, the word signifies one who collects a reward by proclaiming happy news. In Aristophanes and Isocrates this word signifies a reward given because of something that was done well, or because of a report of happy events. The Apostle [Paul] himself uses this beneficial announcement.
But the term Gospel came to mean a new kind of proclamation so that the Law and the new doctrine [Gospel] are distinguished in such a way that the new doctrine gains primary influence.
Law & Gospel Are Distinguished
Indeed, this distinguishing between the Law and the Gospel is the primary consideration. I will not hide behind long explanations or grand arguments but rather provide the necessary distinctions. To wit, it is necessary to distinguish between
- the commandments and the forgiveness of sins,
- the moral precepts and the promises, and also between
- those that are free promises and those that are not free.
Now, as was noted previously, it is the Law that demands perfect obedience to God. The Law does not remit sins freely, and the Law does not pronounce one righteous (that is, acceptable to God) unless the Law is itself satisfied. Sure, the Law contains promises, however, it requires the condition that the Law be fulfilled (see “not free” above).
On the contrary, even though the Gospel speaks of repentance and good works, the benefits that are given are contained in the promise of Christ. This—the promise of Christ—is the fundamental and proper doctrine of the Gospel. That’s because in Christ the satisfaction of the Law for the remission of sins is given freely. Further, the Gospel declares us righteous, even though we do not satisfy the Law.
Law & Gospel Should Not Be Confused
But how are Law & Gospel harmonized? The short answer: the Gospel is equally preached with the Law and repentance, and yet the promise of grace should be expounded in the right way. Let me elaborate.
As most of you know, the Law also has promises. Yet the distinction of the promises should be observed. That is, promises are of two kinds in the Holy Scriptures. The first kind pertains to the Law, and has the conditions of the Law. Said another way, they are put forward—promised—on condition of fulfilling of the law. Thus, the promises of the Law are conditional.
For example, the Law teaches that God is good and merciful, but this goodness and mercy is extended only to those who are without sin. By the way, this is the same thing that human reason teaches, which means that through reason itself one can have a certain knowledge of the Law. Here, then, everyone can consult himself, for the natural man will find within himself a certain judgment concerning God, namely, that He is merciful, yet only to those who are worthy (i.e., to those who are without sin). The natural man will also conclude—if he’s honest—that he can never please God, seeing that he is unclean and unworthy. Thus, the Law and its promises—whether discerned through Scripture or through reason—leave the conscience in doubt because the promises are conditional.
The second kind of promise is of the Gospel proper. Such promises do not have as a cause the condition of the Law. That is, they are not promised on account of the fulfillment of the Law, but freely on account of Christ.
In particular, this is the promise of which the Gospel most clearly speaks: the remission of sins [and imputed righteousness] (also referred to as reconciliation, or justification). For with the Gospel these benefits are certain, and not dependent upon the condition of fulfilling the Law. If we understand [believe] this, then finally we actually have the remission of sins. But when satisfaction of the Law was required, remission of sins was given up as hopeless.
All this means that remission of sins and reconciliation (i.e., justification) is a free gift and is not on account of our dignity, or self-righteousness. And yet it was necessary for justice that there be some victim [propitiation] for us. Therefore, Christ was given for us, and He became this victim so that on account of Him we become pleasing to the Father.
Freely on Account of Christ
So in the Gospel, we have the promise of reconciliation. This promise is distinctly legal (forensic) because the promise is “freely, on account of Christ.” The Apostle Paul explicitly uses this particle “freely”. Hence we diligently and carefully emphasize “freely”. See, for example, Romans 4:16: “Therefore freely by faith, so that the promise is sure.”
Now this particle, “freely on account of Christ,” is what distinguishes Law and Gospel. If we do not notice this particle of the free promise, doubt will remain in our minds, and the Gospel will be transformed into Law, and nothing will communicate to our consciences the remission of sins or justification. If we do not notice this particle of the free promise, then all we have is our natural judgment (our reason), which is the Law, not Gospel.
Therefore, our adversaries, even if they cry that they are teaching the Gospel, still leave the conscience in doubt because they do not teach that reconciliation is free, and in place of the Gospel they teach the Law, as in Hesiod (i.e., the judgment of natural reason).
Thus, this particle, in our eyes and minds, is to be understood as emphasizing “freely.” To this end, it is necessary that we teach that this is a gracious promise. Our objective is threefold: that the promise is certain, that the conscience is set free from doubt, and that we have firm consolation from true terrors. For in these things it is truly realized that this work is a gracious promise. Most of all, though, it is our contention that this is the chief doctrine to which all others are referred.
Yet it ought to be noted: the promise should be received. Paul teaches this in Romans 4:16: “Therefore freely by faith so that the promise is sure.” And 1 John 5:10 says: “Whoever does not believe God has made him a liar” etc. Accordingly, the term “freely” does not exclude faith, but removes the condition of our dignity [self-righteousness], and transfers the cause to our benefit in Christ. Neither is our obedience excluded, yet the total cause of the benefit is transferred from our obedience to Christ so that the benefit is certain. Therefore, even though the Gospel preaches repentance so that the reconciliation is certain, we teach that the remission of sins and God's pleasure do not come to us on account of the dignity [righteousness] or the “newness” of our repentance. This is necessary for the consolation of faithful consciences. And hence it is easily judged how these things agree, that we can teach the Gospel of repentance, and still preach the free promise of reconciliation. But I will say more about this comparison a little bit later.
Christ, in the Gospel of Luke, gives the ultimate definition of the Gospel clearly as a verbal artist, when He describes it in chapter 24, verse 47: “and that repentance and forgiveness of sins should be proclaimed in His name to all nations, beginning from Jerusalem.” This is the preaching of the Gospel repentance and promise, which reason does not naturally grasp, but God reveals it when He promises that He remits our sins on account of Christ, and we are pronounced righteous after receiving the Holy Spirit and eternal life as a gift. This He promises freely, so that it is certain.
Let this then be the definition of the Gospel, in which three components are embraced as the proper benefits of the Gospel, namely that:
- our sins are freely forgiven for the sake of Christ;
- we are graciously pronounced righteous [on account of Christ]; and
- we are reconciled and are received as heirs of eternal life [on account of Christ].
These three components we will explain a little later. Here, it is only necessary to remember the proper benefit of the Gospel, which can otherwise be summed up in one word: justification.