# Non-Competes in Guam[^about] Guam voids employee non-compete agreements by statute — 18 GCA § 88105 derives from former California Civil Code § 1673 and is virtually identical to California's Business and Professions Code § 16600 — and the Supreme Court of Guam reads it as a per-se ban, leaving only narrow sale-of-business and partnership-dissolution exceptions. ## Are employee non-compete agreements enforceable in Guam? {#employee-noncompetes} **Short answer.** No. Guam voids employee non-compete agreements by statute. Title 18 of the Guam Code Annotated, section 88105, makes every contract that restrains someone from exercising a lawful profession, trade, or business void to that extent, except for two narrow statutory exceptions — and in *Island Eye Center, Inc. v. Lombard* the Supreme Court of Guam read that language as a per-se ban [^stat-88105][^ie-void-holding]. Guam's restraint-of-trade statute is not the product of local drafting — it is California law transplanted. Section 88105 descends from the former California Civil Code section 1673, since recodified as the heavily litigated Business and Professions Code section 16600, and the *Island Eye* court said so in the first case to construe the provision [^ie-first-time][^ie-derived]. "Our statute is derived from California Civil Code section 1673, since replaced by California Business and Professions Code section 16600."[^ie-derived] Because the statutes are nearly identical, the court treats California's interpretation as persuasive and adopted its strict employee-mobility reading for the non-compete before it. That means Guam, like California, does not weigh a covenant's duration or geography the way a reasonableness state does. A clause that restrains a former employee from competing is simply outside the statute and void — the court reads section 88105 as an expression of public policy favoring employee mobility [^ie-policy]. "Therefore, we hold that section 88105 evidences public policy for employee mobility and every citizen's right to pursue lawful employment or enterprise of his or her choice."[^ie-policy] Applying that rule, the court struck the non-compete in *Island Eye*, which barred an ophthalmologist from practicing for 30 months across Guam and the Mariana Islands, as void rather than narrowing it to something enforceable [^ie-void-holding]. "These post-employment terms are undoubtedly a restraint of trade in violation of 18 GCA § 88105 and are to that extent void."[^ie-void-holding] This is not a new development. Decades earlier, the Ninth Circuit applied the same statute in *Shelton v. Guam Service Games* and voided a Guam-wide covenant, holding that a positive legislative declaration overrode any common-law reasonableness argument [^shelton-void]. "Since this agreement attempted to make the prohibition and restraint complete within the Territory of Guam, it is to that extent void."[^shelton-void] > [!NOTE] > **Practice note.** > > Do not paper a Guam employee with an out-of-state non-compete form and assume a court will blue-pencil it down to something enforceable. The Supreme Court of Guam voided the non-compete in *Island Eye* outright, and it expressly left open whether blue-penciling an overbroad covenant is even permissible — so reformation is no safe harbor. The only reliable paths to a valid covenant are the narrow sale-of-business and partnership exceptions discussed below [^stat-88105][^ie-void-holding]. ## Are customer and employee non-solicitation clauses enforceable in Guam? {#non-solicitation} **Short answer.** Neither sits on firm ground, and a customer non-solicitation clause likely shares the non-compete's fate. No Guam decision squarely rules on a customer non-solicitation clause, but because *Island Eye* adopted California's section 16600 framework — under which a covenant that forecloses a former employee's ability to compete for business is an impermissible restraint — a customer non-solicit likely carries the same void risk. For clauses barring the solicitation of a former employer's *staff*, the Supreme Court of Guam expressly left the question of facial validity open in *Island Eye* [^q2-ie-postemp][^q2-ie-facial]. Guam took its restraint-of-trade rule from California, where post-employment covenants that foreclose a worker's ability to compete are impermissible restraints regardless of how they are labeled — including the former-client service restriction the court invalidated in *Edwards*, the decision *Island Eye* adopted. *Island Eye* itself distinguished employee anti-raiding clauses from client non-solicits and did not separately rule on a customer non-solicitation clause, so the customer-restriction conclusion is a prediction from the adopted framework rather than a Guam holding [^q2-ie-postemp]. "California courts interpret post-employment covenants not to compete as impermissible restraints of trade which violate section 16600."[^q2-ie-postemp] Employee *anti-raiding* clauses — barring a departing worker from soliciting the employer's remaining staff — are the open question. In *Island Eye*, the employer conceded that such clauses are typically invalidated under California law, and the court resolved the dispute without deciding whether they facially violate section 88105 [^q2-ie-concede][^q2-ie-facial]. "Because of Island Eye's concession, the parties' arguments on appeal are limited to whether non-solicitation clauses facially violate 18 GCA § 88105."[^q2-ie-facial] > [!NOTE] > **Practice note.** > > Treat a customer non-solicitation clause in a Guam employment agreement as carrying the same void risk as a non-compete, and recognize that an employee anti-raiding clause rests on unsettled ground after *Island Eye* — the court declined to rule on its facial validity, and the employer there conceded California voids such clauses. Protect customer relationships and workforce stability through a properly scoped trade-secret and confidentiality program instead [^q2-ie-postemp][^q2-ie-concede]. ## Are non-competes tied to the sale of a business enforceable in Guam? {#sale-of-business} **Short answer.** Yes, within a narrow statutory exception. Section 88106 lets a person who sells the good will of a business agree not to carry on a similar business within a *specified district, city, or a part thereof*, so long as the buyer continues a like business there — but courts read the geographic limit strictly [^stat-88106][^shelton-goodwill]. The sale-of-business exception exists so a buyer can protect the good will it pays for; without it, a seller could reopen next door and take back the customer base just sold. But the covenant must be tied to a genuine sale of good will and confined to a specified district, city, or part of one [^stat-88106]. "One who sells the good will of a business may agree with the buyer to refrain from carrying on a similar business within a specified district, city, or a part thereof, so long as the buyer, or any person deriving title to the good will from him, carries on a like business therein."[^stat-88106] That geographic limit has teeth. In *Shelton v. Guam Service Games*, the Ninth Circuit refused to fit a Territory-wide covenant within the good-will exception, reasoning that a restraint covering the entire Territory of Guam is too broad to be the *specified district, city, or part* the statute allows [^shelton-goodwill]. "By no theory could it include the entire Territory of Guam or any major portion thereof."[^shelton-goodwill] > [!CAUTION] > **Drafting note.** > > Tie a Guam sale-of-business covenant to the good will actually sold and confine it to a specified district, city, or part of one — not the whole island. A covenant scoped to the entire Territory of Guam falls outside section 88106 and, under *Shelton*, leaves section 88105 to void it [^stat-88106][^shelton-goodwill]. ## Can partners agree not to compete on dissolution of a Guam partnership? {#partnership-dissolution} **Short answer.** Yes, within the second statutory exception. Section 88107 lets partners, on or in anticipation of dissolving a partnership, agree not to carry on a similar business within the same city or town where the partnership did business, or a specified part of it [^stat-88107]. This is the partnership analogue to the sale-of-business exception, and it is drafted just as narrowly: the permissible restraint is bounded to the same city or town — or a specified part of it — where the partnership transacted business [^stat-88107]. "Partners may, upon or in anticipation of a dissolution of a partnership, agree that none of them will carry on a similar business within the same city or town where the partnership business has been transacted, or within a specified part thereof."[^stat-88107] > [!CAUTION] > **Drafting note.** > > Scope a partnership non-compete to the same city or town — or a specified part of it — where the partnership actually did business, and tie it to dissolution. A clause reaching beyond that geography, or imposed outside the dissolution context, falls outside section 88107 and is exposed to the section 88105 ban [^stat-88107][^q4-stat-88105]. ## Can a liquidated-damages or penalty clause back up a Guam covenant? {#liquidated-damages} **Short answer.** Generally no. Guam's contract statute voids a clause that fixes damages for breach in advance, except where actual damages would be impracticable or extremely difficult to fix — so a penalty bolted onto a covenant cannot do work the covenant itself cannot [^stat-88103][^stat-88104]. Section 88103 sets the default rule: a contract that fixes the amount of damages in anticipation of a breach is void to that extent [^stat-88103]. "Every contract by which the amount of damage to be paid, or other compensation to be made, for a breach of an obligation, is determined in anticipation thereof, is to that extent void, except as expressly provided in the next section."[^stat-88103] The lone exception, section 88104, permits a genuine liquidated-damages estimate only where actual damages would be impracticable or extremely difficult to fix [^stat-88104]. "The parties to a contract may agree therein on an amount which shall be presumed to be the amount of damage sustained by a breach thereof; when, from the nature of the case, it would be impracticable or extremely difficult to fix the actual damage."[^stat-88104] > [!CAUTION] > **Drafting note.** > > Do not try to rescue a Guam non-compete with a liquidated-damages or penalty clause. The covenant itself is void under section 88105, and section 88103 independently voids a damages-fixing clause unless it meets the narrow section 88104 standard for situations where actual damages are impracticable to calculate [^stat-88103][^stat-88104]. ## What can a Guam employer protect instead of a non-compete? {#trade-secrets} **Short answer.** Trade secrets and narrowly drawn confidentiality. Guam has not adopted the Uniform Trade Secrets Act, so in *Island Eye* the Supreme Court of Guam borrowed the trade-secret definition from the territory's criminal code — 9 GCA § 43.10(f) — to govern civil misappropriation claims; that protection guards genuine secrets without restraining the employee's right to compete [^q6-ie-tradesecret]. Because the *Island Eye* employer had no statutory trade-secret regime to point to, the court had to decide what definition applies to a civil claim. It adopted the criminal-code definition as a matter of first impression [^q6-ie-tradesecret]. "Therefore, we hold that the definition of trade secrets in 9 GCA § 43.10(f) is the definition of trade secrets for civil trade-secret-misappropriation claims."[^q6-ie-tradesecret] A confidentiality or trade-secret program protects the *information* rather than the employment relationship, which is why it is the durable tool a Guam employer has after section 88105 takes a non-compete off the table. The discipline it requires is precision: a confidentiality clause cannot be written so broadly that it functions as a back-door non-compete barring the employee from the field, because that would be the very restraint section 88105 voids. The court drew that line itself. *Island Eye* rejected the *inevitable disclosure* doctrine — the theory that a departing employee will inevitably use trade secrets in a new job — precisely because it would convert trade-secret protection into a de facto covenant not to compete, and stressed that such protection is a shield rather than a sword [^q6-ie-shield]. "Trade-secret protection should be a shield, not a sword used by employers to retain its employees by threat of rendering them substantially unemployable in their field of experience or prevent workers from pursuing their livelihoods when they leave their current positions."[^q6-ie-shield] > [!CAUTION] > **Drafting note.** > > Do not define *confidential information* so broadly that it sweeps in the employee's general skills, knowledge, and industry experience — a confidentiality clause that effectively prevents the worker from practicing their profession is a non-compete in substance and void under section 88105. Tie confidentiality to genuine secrets that meet the 9 GCA § 43.10(f) definition the Supreme Court of Guam adopted, and remember that hiring a former competitor's at-will staff is not itself misappropriation absent an identifiable trade secret [^q6-ie-tradesecret][^q6-ie-shield]. [^about]: By Steven Obiajulu, J.D. Published by [openagreements.org](https://openagreements.org). Last reviewed 2026-06-03. License: CC BY 4.0. Steven Obiajulu, J.D. is admitted in New York, not Guam. This article synthesizes Guam primary law and is not legal advice from a Guam-admitted attorney. This article is for informational purposes only and does not create an attorney-client relationship. [^stat-88105]: **18 GCA § 88105 — Contracts in Restraint of Trade** — "Every contract, by which anyone is restrained from exercising a lawful profession, trade, or business of any kind, otherwise than is provided in the next two sections, is to that extent void." *18 GCA § 88105.* [^ie-void-holding]: **Island Eye Center, Inc. v. Lombard** — "These post-employment terms are undoubtedly a restraint of trade in violation of 18 GCA § 88105 and are to that extent void." *Island Eye Ctr., Inc. v. Lombard, 2020 Guam 32.* [^ie-first-time]: **Island Eye Center, Inc. v. Lombard** — "This is the first time we have been asked to interpret our restraint-of-trade provision." *Island Eye Ctr., Inc. v. Lombard, 2020 Guam 32.* [^ie-derived]: **Island Eye Center, Inc. v. Lombard** — "Our statute is derived from California Civil Code section 1673, since replaced by California Business and Professions Code section 16600." *Island Eye Ctr., Inc. v. Lombard, 2020 Guam 32.* [^ie-policy]: **Island Eye Center, Inc. v. Lombard** — "Therefore, we hold that section 88105 evidences public policy for employee mobility and every citizen's right to pursue lawful employment or enterprise of his or her choice." *Island Eye Ctr., Inc. v. Lombard, 2020 Guam 32.* [^shelton-void]: **Shelton v. Guam Service Games** — "Since this agreement attempted to make the prohibition and restraint complete within the Territory of Guam, it is to that extent void." *Shelton v. Guam Service Games, 239 F.2d 902 (9th Cir. 1956).* [^q2-ie-postemp]: **Island Eye Center, Inc. v. Lombard** — "California courts interpret post-employment covenants not to compete as impermissible restraints of trade which violate section 16600." *Island Eye Ctr., Inc. v. Lombard, 2020 Guam 32.* [^q2-ie-facial]: **Island Eye Center, Inc. v. Lombard** — "Because of Island Eye's concession, the parties' arguments on appeal are limited to whether non-solicitation clauses facially violate 18 GCA § 88105." *Island Eye Ctr., Inc. v. Lombard, 2020 Guam 32.* [^q2-ie-concede]: **Island Eye Center, Inc. v. Lombard** — "Island Eye concedes that employee non-solicitation clauses are typically invalidated under California law as unlawful restraints of trade." *Island Eye Ctr., Inc. v. Lombard, 2020 Guam 32.* [^stat-88106]: **18 GCA § 88106 — Exception: Sale of Good Will** — "One who sells the good will of a business may agree with the buyer to refrain from carrying on a similar business within a specified district, city, or a part thereof, so long as the buyer, or any person deriving title to the good will from him, carries on a like business therein." *18 GCA § 88106.* [^shelton-goodwill]: **Shelton v. Guam Service Games** — "By no theory could it include the entire Territory of Guam or any major portion thereof." *Shelton v. Guam Service Games, 239 F.2d 902 (9th Cir. 1956).* [^stat-88107]: **18 GCA § 88107 — Exception: Partnership Agreement** — "Partners may, upon or in anticipation of a dissolution of a partnership, agree that none of them will carry on a similar business within the same city or town where the partnership business has been transacted, or within a specified part thereof." *18 GCA § 88107.* [^q4-stat-88105]: **18 GCA § 88105 — Contracts in Restraint of Trade** — "Every contract, by which anyone is restrained from exercising a lawful profession, trade, or business of any kind, otherwise than is provided in the next two sections, is to that extent void." *18 GCA § 88105.* [^stat-88103]: **18 GCA § 88103 — Contract Fixing Damages** — "Every contract by which the amount of damage to be paid, or other compensation to be made, for a breach of an obligation, is determined in anticipation thereof, is to that extent void, except as expressly provided in the next section." *18 GCA § 88103.* [^stat-88104]: **18 GCA § 88104 — Exceptions** — "The parties to a contract may agree therein on an amount which shall be presumed to be the amount of damage sustained by a breach thereof; when, from the nature of the case, it would be impracticable or extremely difficult to fix the actual damage." *18 GCA § 88104.* [^q6-ie-tradesecret]: **Island Eye Center, Inc. v. Lombard** — "Therefore, we hold that the definition of trade secrets in 9 GCA § 43.10(f) is the definition of trade secrets for civil trade-secret-misappropriation claims." *Island Eye Ctr., Inc. v. Lombard, 2020 Guam 32.* [^q6-ie-shield]: **Island Eye Center, Inc. v. Lombard** — "Trade-secret protection should be a shield, not a sword used by employers to retain its employees by threat of rendering them substantially unemployable in their field of experience or prevent workers from pursuing their livelihoods when they leave their current positions." *Island Eye Ctr., Inc. v. Lombard, 2020 Guam 32.*