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TESTAMENT. A word the KJV uses thirteen times to translate the Greek word diathēkē, which signifies a testamentary disposition. KJV translates it “covenant” twenty times, as usually the NT uses diathēkē in the meaning of its cognate synthēkē, which accurately renders the OT berith, a binding agreement or contract between one human being and another or between a human being and God. Jesus, at the institution of the Lord's Supper|Lord’s Supper, said, “This cup is the new covenant [testament] in my blood” (Luke.22.20; 1Cor.11.25), referring to Exod.24.8. Jesus’ death created a new relation between God and believers. The imagery in Heb.9.15-Heb.9.20 includes the notion of a testamentary disposition, operative only after the testator’s death; only in Heb.9.16-Heb.9.17 does NIV have “will” (testament kjv, mlb, neb) for diathēkē (elsewhere niv has covenant).

TESTAMENT (διαθήκη, G1347). “Testament” came into Eng. as the tr. of the Gr. term, through the Lat. testamentum, which meant a will. Diathēkē was the ordinary word in Gr. for a will, but not the ordinary word for a covenant. The ordinary Gr. word for covenant was suntheke, which described an agreement, a bargain entered into between contracting parties. Diathēkē, meaning will, suggested the bequest of one individual that was received by another individual. Sometimes it appears that diathēkē had the double meaning of “will,” or “covenant.” Aristophanes used the word to mean “covenant”; also the author of Hebrews seemed to make a play on the double meaning of the term (Heb 9:15-17). It may be that the Biblical basis for “testament” as a designation of the two major divisions of the Bible came out of the use of diathēkē in Hebrews.

International Standard Bible Encyclopedia (1915)

tes’-ta-ment: The word diatheke, almost invariably rendered "covenant," was rendered in the King James Version "testament" in Heb 9:16,17, in the sense of a will to dispose of property after the maker’s death. It is not easy to find justification for the retention of this translation in the Revised Version (British and American), "especially in a book which is so impregnated with the language of the Septuagint as the Epistle to the Hebrews" (Hatch).