God delivered an undeserving people before they entered into His covenant. Before God gave Israel the law, He gave them Himself as their redeemer when he liberated them from Egypt. He didn't send the Ten Commandments and tell them to obey them before He saved them. He first saved them, then sent His law in response. The Passover story, and other holidays, show God's grace in action.
Obedience is a response to grace.
Obedience is the fruit of grace. God wants us to tell the story of His grace to our children. We have grace. Of course we are saved by grace, through faith in Christ. Many of today's churches are adopting the world's standards in the name of grace.