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St. Augustine famously said, in his multi-book tome, the City of God (Book 11, Chapter 26), that: “If I am mistaken, I am.” St. Augustine elaborated on his premise as follows:
For a man who does not exist can surely not be mistaken either, and if I am mistaken, therefore I exist. So, since I am if I am mistaken, how can I be mistaken in believing that I am when it is certain that if I am mistaken I am. Therefore, from the fact that, if I were indeed mistaken, I should have to exist to be mistaken, it follows that I am undoubtedly not mistaken in knowing that I am.
And being mistaken about your personal existence may very well prove that you in fact exist, because it does indeed seem logical that you cannot be mistaken about existing without in fact existing, setting aside the concerns that we may be living in a matrix or computer simulation, which St. Augustine did not consider in the year 426 CE.
But a recent Delaware case suggests that being mistaken about the existence of an artificial person (i.e., a corporation) does not in fact prove the existence of that artificial person – there are formalities that must be observed to bring an artificial person into existence. And if you are mistaken about the existence of an artificial person, it isn't. Merely representing that a party “is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation; [and] …that it has the legal right and authority to enter into and perform its obligations under this Agreement[,]” does not mean that it is or it does.
AI Litigation Finance Associates, Inc. v. Fortuna-Insights, Inc., C.A. No. N25C03-056 SKR CCLD (Del Super. Sept. 4, 2025) involved a license agreement entered into between AI Litigation Finance Associates, Inc. (“ALFA”) and Fortuna-Insights, Inc (“Fortuna”), whereby ALFA sought access to Fortuna's “propriety AI-based legal research software.” When the relationship soured, Fortuna sought to terminate the license agreement. Fortuna took advantage of a fact that it uncovered – ALFA had not been incorporated “until the day after the parties had executed the license agreement.” Oops!
“A corporation ‘does not come into existence until the Certificate of Incorporation is filed with the Secretary of state'[; and] [t]herefore corporations are not generally subject to agreements made prior to their incorporation date.” There is a doctrine that binds a corporation to an agreement entered into prior to existence if it “expressly adopts the preincorporation agreement or implicitly adopts it by accepting its benefits with knowledge of its terms,” but that doctrine is only invoked where the counterparty is seeking to enforce the agreement, not where the later formed corporation is seeking to enforce the agreement. There is also a doctrine that permits a counterparty to enforce a contract against the promoter who signed the contract on behalf of a yet unformed corporation that is later formed. But that doctrine doesn't permit the later formed corporation to enforce the contract, it only makes the promoter liable if the counterparty chooses to enforce the contract. Apparently, this one-day mistake was devastating to ALTA because it was deprived of software that was vital to its newly formed business.
“… a recent Delaware case suggests that being mistaken about the existence of an artificial person (i.e., a corporation) does not in fact prove the existence of that artificial person – there are formalities that must be observed to bring an artificial person into existence.”
So, next time you are wondering why there is all this fuss about the timing of incorporation or entity formation, or the need for certificates of existence and good standing, just remember that if you are mistaken about an entity's existence, it isn't.
But I am again invoking Sergeant Phil Esterhaus on this one (and by now I should not have to say it – you should be able to say it for me).
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