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Corporation by estoppel refers to one who contracts and deals with an entity as a corporation thereby admits that the entity is a corporation and is estopped to deny its incorporation in an action arising out of the contract or course of dealing. Corporation by estoppel is a concept conceived and applied in equity to avoid injustice and unfairness. It is a general rule, founded upon equitable principles, and if any exceptions exist, it is only where there are no facts which make it legally unjust to forbid its denial.
The following is a case law defining corporation by estoppel:
Corporation by estoppel is where a body assumes to be a corporation, and acts under a particular name, a third party dealing with it under such assumed name is estopped to deny its corporate existence. [Pim, Inc. v. Steinbichler Optical Techs., 2001 Mich. App. LEXIS 2600 (Mich. Ct. App. Sept. 4, 2001)].