Which of the following best describes a corporation by estoppel?

A corporation by estoppel occurs in situations where an entity conducts itself in a manner that leads others to believe it is a legitimate corporation, even though it has not properly filed the necessary documents or met all legal requirements. In this context, when a corporation is acting without proper authority, it can still be held liable as if it were a legitimate entity due to the reliance of third parties on its actions. This principle protects those who have engaged with the corporation in good faith, preventing them from losing their entitlements simply because the corporation lacked formal status.

This understanding highlights the crucial role that the conduct and representation of the corporation play in establishing a form of legal recognition—even in the absence of formal incorporation. Hence, it safeguards third parties who may have relied on the corporation's facade of legitimacy while engaging in contracts or transactions with it.