What are the difference between De facto corporation and corporation by estoppel?

Answer 1

De facto corporation and corporation by estoppel are both terms that are used by courts to describe circumstances in which a business organization that has failed to become a de jure corporation (a corporation by law) will nonetheless be treated as a corporation, thereby shielding shareholders from liability. In order for a de facto corporation to be created, there must have been a good faith attempt to comply with the statutes to establish a corporation by the intended incorporators. For example, if the articles of incorporation were mailed to the wrong office, addressed to the wrong person, or lost in the mail. There must also have been some act on the corporation's behalf by its purported officers or agents. If both of these requirements are met, then the business will be treated as a corporation for all purposes, except with respect to acts by 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 applies against someone who deals with a business as if it were a corporation, even if there was no good faith effort by the business to incorporate. The person doing business with such an entity may later be estopped from arguing that it is not in fact a corporation 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