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God's mercy prevents his enactment of righteous judgement and punishment upon us i.e. he doesn't give us what we actually deserve. God's grace bestows forgiveness and pardon upon the repentant sinner i.e. His grace gives and provides us with what we do not deserve.
Grace is in my opinion the state of being protected or sanctified by the favor of God. His love for all, it is so big that he gives us an unmerited gift. We didn't deserve that gift, and I don't want to create a problem with this, but I think that we don't deserve it now! Grace is also a short prayer of blessing from God, a way to thank him with a prayer before meal or it can be done after, as a recognition that the meal doesn't come from us but by God! Mercy from the late Latin (MERCES) or (REWARD) it is God's compassion, God's love for us, who sent his Son to pay the price on the cross, so we can be reconciled with the Father!
I look at grace and mercy as two sides of the same coin. I can't give you just the "heads" side without giving you the "tails" side as well. In the same way, You can't grant mercy without extending grace. Let's say I am a judge and you are the defendant. You have been convicted of very serious crimes and should be sentenced to death. Let's say you plead with me to show mercy and not sentence you to death. I agree and let you go free. I granted you mercy by not sentencing you to death (which you deserved because of your crimes). At the same time, I extended grace to you by giving you life (which you didn't deserve because of your crimes). That is what has been done for us by the sacrifice of Jesus. Because of our rebellion against God, we deserve separation from Him but through Christ we won't be separated. By granting us mercy, we get grace. By extending grace, we get mercy.
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