Sartorial, Inc., a new business enterprise about to commence the manufacture of clothing, entered into a written agreement to purchase all of its monthly requirements of a certain elasticized fabric for a period of three years from the Stretch Company at a specified unit price and agreed delivery and payment terms. The agreement also provided: 1. The parties covenant not to assign this contract. 2. Payments coming due hereunder for the first two months shall be made directly by Sartorial to Virginia Wear and Son, Inc., a creditor of Stretch. Stretch promptly made an "assignment of the contract" to Finance Company as security for a $100,000 loan. Sartorial subsequently ordered, took delivery of, and paid Stretch the agreed price ($5,000) for Sartorial's requirement of the fabric for the first month of its operation.Which of the following accurately states the legal effect of the covenant not to assign the contract?
The covenant made the assignment to Finance Company ineffective. The covenant had no legal effect. Stretch's assignment was a breach of its contract with Sartorial but was 38 nevertheless effective to transfer to Finance Company Stretch's rights against Sartorial. By normal interpretation, a covenant against assignment in a sale-of-goods agreement applies to only the buyer, not the seller