De facto corporation and corporation by estoppel are both terms that are used by court

Court

A court is a form of tribunal, often a governmental institution, with the authority to adjudicate legal disputes between parties and carry out the administration of justice in civil, criminal, and administrative matters in accordance with the rule of law...

s in most common law

Common law

Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...

 jurisdiction

Jurisdiction

Jurisdiction is the practical authority granted to a formally constituted legal body or to a political leader to deal with and make pronouncements on legal matters and, by implication, to administer justice within a defined area of responsibility...

s 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 shareholder

Shareholder

A shareholder or stockholder is an individual or institution that legally owns one or more shares of stock in a public or private corporation. Shareholders own the stock, but not the corporation itself ....

s from liability.

De facto corporation

In order for a de facto corporation to be created, the following elements must exist:

1. There must be an incorporation statute
   Statute
   A statute is a formal written enactment of a legislative authority that governs a state, city, or county. Typically, statutes command or prohibit something, or declare policy. The word is often used to distinguish law made by legislative bodies from case law, decided by courts, and regulations...
   
    that lays out the various requirements under which legal incorporation can be accomplished;
2. There must have been a good faith attempt to comply with the statute by the intended incorporators;

   For example, if the articles of incorporation

   Articles of Incorporation

   The Articles of Incorporation are the primary rules governing the management of a corporation in the United States and Canada, and are filed with a state or other regulatory agency.An equivalent term for LLCs in the United States is the Articles of Organization...

   
    were mailed to the appropriate office, but addressed to the wrong person, lost in the mail, or not filed by the corporation by the time the corporation began acting in an official capacity.

3. There must have been act made on the corporation's behalf by its purported officers or agents
   Agency (law)
   The law of agency is an area of commercial law dealing with a contractual or quasi-contractual, or non-contractual set of relationships when a person, called the agent, is authorized to act on behalf of another to create a legal relationship with a third party...
   
   .

If all 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

Corporation by estoppel, on the other hand, applies against someone who operates a business as if it were a limited liability entity or corporation, irrespective of whether there was a good faith effort by the business to incorporate. The person doing business with such an entity, as if it were a limited liability entity or corporation, may later be estopped

Estoppel

Estoppel in its broadest sense is a legal term referring to a series of legal and equitable doctrines that preclude "a person from denying or asserting anything to the contrary of that which has, in contemplation of law, been established as the truth, either by the acts of judicial or legislative...

from arguing that it is not in fact a limited liability entity, 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.

Differences between de facto corporation and corporation by estoppel

Both doctrines are applicable in the contract context but the estoppel concept typically does not apply where tort liability is sought because knowledge of corporate existence is irrelevant to the commission of tort. The harm caused by a tortious act normally does not depend on knowledge, or lack thereof, of a corporation's existence.