Throughout most of the poem, the covenant between Gawain and the Green Knight evokes the literal kind of legal enforcement that medieval Europeans might have associated with the Old Testament. The Green Knight at first seems concerned solely with the letter of the law. Even though he has tricked Gawain into their covenant, he expects Gawain to follow through on the agreement. And Gawain, though he knows that following the letter of the law means death, is determined to see his agreement through to the end because he sees this as his knightly duty.
At the poem’s end, the covenant takes on a new meaning and resembles the less literal, more merciful New Testament covenant between Christ and his Church. In a decidedly Christian gesture, the Green Knight, who is actually Gawain’s host, Bertilak, absolves Gawain because Gawain has confessed his faults. To remind Gawain of his weakness, the Green Knight gives him a penance, in the form of the wound on his neck and the girdle. The Green Knight punishes Gawain for breaking his covenant to share all his winnings with his host, but he does not follow to the letter his covenant to decapitate Gawain. Instead of chopping Gawain’s head off, Bertilak calls it his right to spare Gawain and only nicks his neck.
Ultimately, Gawain clings to the letter of the law. He cannot accept his sin and absolve himself of it the way Bertilak has, and he continues to do penance by wearing the girdle for the rest of his life. The Green Knight transforms his literal covenant by offering Gawain justice tempered with mercy, but the letter of the law still threatens in the story’s background, and in Gawain’s own psyche.