What is the reason behind Allah's taking the covenant from the Children of Adam? And were they in existence when the covenant was taken, or not?

This covenant was taken from the Children of Adam after the creation of their souls. Scholars differed as to whether the souls were in their bodies or not.

Ibn Al-Qayyim said that the doctrine of the people of Hadith and the great scholars is that Allah brought forth the offspring of Adam from his loins and the loins of his descendants, while they were in the form of particles (dharr). He took the covenant from them that they were created beings, and they confessed and accepted after He instilled intellects in them.

Al-Jurjani mentioned that there is no contradiction between the Prophet's hadith (peace and blessings be upon him) and the verse, because taking them from Adam's loins means taking them from the loins of his descendants. And Allah's saying: (lest you should say on the Day of Resurrection: "Indeed, we were unaware of this") means unaware of the covenant taken from them.

Some scholars claimed that the covenant was taken from the souls, not the bodies, because souls are what understand, comprehend, are rewarded, and punished, whereas bodies do not comprehend. Ishaq ibn Rahawayh adopted this meaning and mentioned that it was the saying of Abu Hurayrah. The scholars are in agreement that these were the souls before the bodies.