De facto corporation and corporation by estoppel
Section::::"De facto" corporation. In order for a "de facto" corporation to be created, the following elements must exist: If all of these requirements are met, then the business will be treated as a corporation for all purposes, except with respect to acts by the state itself. However, most states will not apply this doctrine to protect a person who was "aware" that the incorporation effort was defective at the time that they purported to act on behalf of the corporation. Corporation by estoppel. Corporation by estoppel, on the other hand, applies against someone  who operates a business "as if it were" a limited liability entity or corporation, irrespective of whether there was a good faith effort by the business to incorporate. The person doing business with such an entity, as if it were a limited liability entity or corporation, may later be estopped from arguing that it is not in fact a limited liability entity, in an attempt to reach the assets of the incorporators. For the same reason, defendants who had acted as a corporation will be estopped from denying liability as a corporation when sued by a plaintiff who had relied  on the defendant's corporate form when dealing with the defendant. Differences between "de facto" corporation and corporation by estoppel. Both doctrines are applicable in the contract context but the estoppel concept typically does not apply where tort liability is sought because knowledge of corporate existence is irrelevant to the commission of tort. The harm caused by a tortious act normally does not depend on knowledge, or lack thereof, of a corporation's existence.