The common law dealt with defects in the incorporation process using the concepts of de jure corporations, defective corporations, de facto corporations and corporations by estoppel. Many jurisdictions have eliminated these concepts by statute, but they still exist in a few states and they appear on bar exams.

Doctrines for Defective Corporations

De Jure Corporations. A de jure corporation is created when the incorporators make an apparent attempt to form a corporation and substantially comply with the statutory requirements to do so. That is, de jure corporations are what happens when everything goes right. They are legal corporations. We mention them here only to contrast them with defective corporations.

Defective Corporations. A defective corporation is one that has not complied with the legal requirements for incorporation. This could be because the incorporators failed to file the necessary documents or failed to comply with statutory formalities.

De Facto Corporations. De facto corporations are corporations that do not meet the legal requirements of incorporation, but that are nonetheless treated as de jure corporations for most purposes. Specifically, a corporation de facto exists when there has been a good faith attempt to form the corporation and the corporation has exercised the functions or conducted the business that it was organized to perform. The exact requirements will vary by state, and as noted below, many states no longer accept the de facto corporation doctrine. Where a de facto corporation exists, it's treated as a de jure corporation for eveyone except the state. So the state can challenge the corporation's existence, but a contractual party can't try to get out of the contract or make the incorporators personally liable based on these types of technical faults.

Corporations by Estoppel. The corporation by estoppel doctrine holds that a third party who has recognized an entity's corporate status and dealt with it as a corporation cannot challenge whether the corporation is validly existing. This arises most often where a party is trying to get out of a contract by claiming that the corporation wasn't validly formed or where a party wants to sue the incorporators personally for a contract signed in the corporation's name.

The Effect of the MBCA

MBCA § 203 says "the corporate existence begins when the articles of incorporation are filed," and that the "secretary of state’s filing of the articles of incorporation is conclusive proof that the incorporators satisfied all conditions precedent to incorporation except in a proceeding by the state to cancel or revoke the incorporation or involuntarily dissolve the corporation."

MBCA § 204 reads, "All persons purporting to act as or on behalf of a corporation, knowing there was no incorporation under this Act, are jointly and severally liable for all liabilities created while so acting."

Some states read these statutes as eliminating the doctrines of de facto corporation  and corporation by estoppel. In re Est. of Woodroffe, 742 N.W.2d 94, 103 (Iowa 2007) (rejecting the de facto corporation doctrine and noting it has also been rejected in Alaska, Arizona, DC, Minnesota, Oregon, South Dakota, Tennessee, Utah and Washington).

Other states continue to apply the doctrines, but may limit their application. For example, in Nebraska, if a corporation has been involuntarily dissolved by the state because it hasn't paid its taxes, the corporation may still continue as a de facto corporation. In these cases, the state may challenge the existence of the corporation, but third parties can't. In re Est. of Greb, 288 Neb. 362, 373 (2014).

Because they may still exist in your area, be aware of them as potential claims, but confirm (or dispute) their existence if you face them in practice.