Section 20: CORPORATION BY ESTOPPEL

Question 1

What is Section 20: CORPORATION BY ESTOPPEL?

Answer 1

All persons who ASSUME to ACT as a corporation knowing it to be without authority to do so shall be liable as GENERAL PARTNERS for all debts, liabilities and damages incurred or arising as a result thereof: Provided, however, That when any such ostensible corporation is sued on any transaction entered by it as a corporation or on any tort committed by it as such, it shall NOT be allowed to use its lack of corporate personality as a DEFENSE.

(the corporation by estoppel cannot deny its corporate existence to escape liability from third person and vice versa)

Question 2

IN SIMPLE TERMS

Answer 2

it is NOT a corporation
it has NO juridical personality

TO PROTECT 3RD PERSONS:

the law allow THIRD PERSONS to treat them as a corporation

Question 3

MEANING OF ESTOPPEL

Answer 3

ESTOPPEL is when you are precluded from denying a fact that contradicts to the their previous actions of assertions

Question 4

What is the liability of corporation by estoppel?

Answer 4

liable as GENERAL PARTNERS for all debts, liabilities and damages incurred or arising as a result thereof

Question 5

IS IT THE SAME W/ DE FACTO?

Answer 5

NO, because DE FACTO has a certificate of incorporation BUT has DEFECTS

HOWEVER, corporation by ESTOPPEL DID NOT go through incorporation process and has NO corporate existence