Liability of corporations by estoppel

Since the dawn of the Industrial Revolution, corporations have been the norm for operating a business for any would-be capitalist. Setting up and operating your own corporation gives you, most importantly, limited liability (i.e., your legal liability is limited to your investment in the corporation), as well as the privilege to add “Inc.,” “Incorporated,” or “Corp.” at the end of your company name, an added impression of legitimacy in your endeavors, a lasting sense of conviction in your business ventures, and a feeling that you’ve made it and that you’re headed in the right direction.

To enjoy the benefits of a corporation, some attempt to portray themselves as corporations, even if they are not corporations. When persons misrepresent themselves as forming part of a corporation, when in truth and in fact no such corporation exists or was incorporated, such persons are estopped from claiming that no corporation exists in order to avoid liability in the transactions they entered into under the name of the non-existent corporation. A corporation by estoppel would be established in such case.