Defective Incorporation

Question 1

What is a de jure corporation?

Answer 1

A corporation organized in compliance with the statute

Question 2

What is de facto corporation?

Answer 2

A de facto corporation may be formed if:

1. a good-faith attempt was made to comply with the BCL; AND
2. the corporate principals in good faith acted as if they were a corporation

Question 3

Effect of de facto corporation?

Answer 3

Insulation from liabilty on contracts with 3rd party creditors

Question 4

Corporation by estoppel

Answer 4

• Parties dealt with each other in good faith, without knowledge there was a defect
• court may hold they’re a corporation and shield from personal liability