Scripture itself distinguishes very clearly between the Law and the Gospel and likewise our Lutheran Confessions. According to the Formula of Concord (Thor. Decl., V, 17) the Law, in its strict or proper sense (lex proprie accepta), is "a divine doctrine in which the righteous, immutable will of God is revealed, what is to be the quality of man in his nature, thoughts, words, and works, in order that he may be pleasing and acceptable to God; and it threatens its transgressors with God's wrath and temporal and eternal punishments." More briefly the Epitome of the Formula of Concord (V, 3. 4) defines the divine Law in its proper sense as "a divine Doctrine which teaches what is right and pleasing to God and reproves everything that is sin and contrary to God's will," so that "everything that reproves sin is, and belongs to, the preaching of the Law."
On the other hand, the Gospel, in its strict or proper sense (evangelium proprie acceptum), is defined by the same Confession as "such a doctrine as teaches what man who has not observed the Law and therefore is condemned by it is to believe, namely, that Christ has expiated, and made satisfaction for, all sins and has obtained and acquired for him, without any merit of his, ... forgiveness of sins, righteousness that avails before God, and eternal life." (Epitome, V, 5.)
This distinction between the Law and the Gospel is clear and Scriptural, so that we may describe as divine Law everything in Scripture that demands of man perfect obedience to God, Gal. 3, 12, pronounces His curse upon all transgressors, Gal. 3, 10, renders all the world guilty before God, Rom. 3, 19, and mediates knowledge of sin, Rom. 3, 20; and as Gospel everything that offers grace, peace, and salvation to the sinner, Rom. 1, 16. 17; 10, 15; Acts 20, 24; Eph. 6, 15; 1, 13.
It is true, both terms (Law and Gospel) are used in Scripture also in a wider sense, so that the term Law denotes the entire revelation of God as this is set forth in His Word, Ps. 1, 2; Is. 2, 3, and the term Gospel the entire divine doctrine, Mark 1, 1. This is done by way of synecdoche, so that the whole is named after a part (Gerhard: uut ex parte digniori et potiori totum intelligatur").
This peculiar use of the term Gospel is recognized also by our Lutheran Confessions; for we read in the Formula of Concord (Thor. Decl., V, 3 ff.): "The term Gospel is not always employed and understood in one and the same sense, but in two ways in the Holy Scriptures. . . . For sometimes it is employed so that there is understood by it the entire doctrine of Christ, our Lord .... Furthermore the term Gospel is employed in another, namely, in its proper sense, by which it comprises ... only the preaching of the grace of God."
Mueller's chapter 20 on law and gospel is originally in Pieper's vol. 3, treated in the chapter on the means of grace, the word (page 257-297).