Southern-Gulf Marine v. Camcraft

Name:Southern-Gulf Marine v. Camcraft

Cite:410 So.2d 1181 (La. App. 1982).

• Procedural Posture:

Southern-Gulf filed suit for breach of contract against Camcraft for failure to deliver a ship. Camcraft responded that Southern-Gulf had no cause of action because it was not incorporated at the time the contract was executed. The trial court decided that since Southern-Gulf was not a corporation at the time the Vessel Construction Contract was signed, the contract was not enforceable because it had only one party.

• Background and Description:

The contract stated that Southern-Gulf, a company to be formed, would purchase a vessel from Camcraft. This contract acknowledged future Vessel Construction Contract that was executed between Southern-Gulf and Camcraft.

• Issues:

1. Should Camcraft be estopped from asserting Southern-Gulf's lack of incorporation?

2. Does the fact that Southern-Gulf was incorporated in the Cayman Islands instead of Texas allow for the breach?

• Holding:

1. Camcraft should not be able to escape it's breach of contract based on the character of the organization to which it is obligated unless Camcraft's substantial rights would be affected. Camcraft acknowledged the validity of Southern-Gulf when they contracted and thus should be estopped from denying otherwise.

2. Camcraft had no objections originally and the contract allowed for assignments or transfers.

Essentially, the court found corporation by estoppel because of reliance by both parties, construction had begun, liability would have been found the other direction had Southern-Gulf defaulted; and that Camcraft effectively ratified the change of jurisdiction of venue by signing the ratification agreement.

• Other Discusion:

Camcraft made 2 arguments:
1. No contract because Plaintiff corporation was not incorporated at time of execution of contract

2. Corporation was incorporated in the wrong jurisdiction