Three of the following are requisites for the existence of a de facto corporation except:

• A. Incorporated under a valid law
• B. Actual use of corporate powers
• C. Existing law and in fact
• D. Attempt in good faith to organize

Answer: (C)

The idea being tested is what conditions create a de facto corporation. A de facto corporation exists when there is a valid law under which such a corporation could be formed, there is an attempt to organize in good faith, and there is actual use of corporate powers.

The option labeled as the exception isn’t a separate requirement. “Existing law and in fact” mixes elements already covered by the other three requisites: the valid law and the attempt in good faith, plus the actual use of corporate powers. In other words, the law that could authorize formation and the real-world action of acting as a corporation are already accounted for by the three true requisites, so treating “existing law and in fact” as an additional, distinct requisite isn’t correct.