Legal Question in Business Law in Maryland

If a Corporation Does Not Exist Because of Delinquent

A company forfeited its corporate status in October 2001

because of delinquent taxes. According to the State of

Maryland, ''its existence has been ended by the State

for some delinquency.''

A subcontracting company signs an agreement with this

''company'' in January 2002, not knowing about its status

according to the State of Maryland. This agreement covers

nondisclosure, confidentiality, noncompetition, that legal

proceedings must occur in Maryland, and that legal fees

must be paid by the subcontracting company to cover

everything that is delineated in that contract.

This contract was signed by the officer of a corporation

that does not exist according to the State of Maryland.

Is this contract valid and legally binding? If not,

is there a special term for where this contract stands,

like ''voided''?

Thank you for your help.


Asked on 8/17/02, 12:35 pm

2 Answers from Attorneys
Cotie Jones Jones & Associates

Re: If a Corporation Does Not Exist Because of Delinquent

The contract would not be voided, unless the corporate status of the contracting company was somehow central to an important term of the agreement. Usually, if a corporation loses its corporate status, it may either be revived by statute, or the defunct corporation passes control to its "trustees" usually officers or incorporators of the entity. You should contact me or another attorney for advice if the corporations status is important to your agreement.

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Answered on 8/17/02, 1:44 pm
Alton Drew Alton Drew, LLC

Re: If a Corporation Does Not Exist Because of Delinquent

If an association that is neither a corporation in fact or corporation by law holds itself out as a corporation, normally it will be prohibited from denying its corporate status. If it is sued, the corporation will normally not be allowed to escape liability. When justice requires, the courts will treat an alleged corporation as an actual corporation for the purpose of determining rights and liabilities for a particular situation.

The corporation could revive itself. If so, the corporation will be liable for all contracts entered into while the charter was void. An argument could be made that the party that entered into a contract with the corporation while the charter was void could also be held liable once the charter is revived.

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Answered on 8/17/02, 7:05 pm


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