Core Viewpoint - The court ruled that Costco's unilateral cancellation of a customer's membership constituted a breach of contract, leading to an appeal by Costco to overturn the decision [2][3][8]. Group 1: Legal Proceedings - A customer, Mr. Li, had his membership canceled by Costco after multiple complaints, which the court found to be a breach of contract [2][8]. - The first-instance court ordered Costco to continue fulfilling the contract and extend Mr. Li's membership by 96 days [3][8]. - Costco filed an appeal, arguing that its membership terms are legally binding and that the court misapplied the law regarding the cancellation of Mr. Li's membership [3][5]. Group 2: Membership Terms and Conditions - Costco claims that its membership terms allow for the cancellation of membership under certain conditions, including behavior deemed inappropriate [5][6]. - The specific clause cited by Costco states that it can cancel membership without refunding the annual fee if inappropriate behavior is detected [5][6]. - The court found that the clause granting Costco unilateral cancellation rights was a standard form contract that did not adequately inform Mr. Li of the implications, thus ruling it unenforceable [8]. Group 3: Company Background and Financials - Costco operates a membership-based warehouse model and entered the Chinese market in August 2019, currently having seven stores in various cities [5]. - The membership fee is set at 299 yuan per year, and as of the first quarter of fiscal year 2026, Costco reported revenues of $67.307 billion, a year-on-year increase of 8.3%, and a net profit of $2.001 billion, up 11.3% [5]. - As of November 23, 2025, Costco had 81.4 million paying members, reflecting a 5.2% increase [5].

Core Viewpoint - The court ruled that Costco (Nanjing) Commercial Co., Ltd. breached the contract by unilaterally canceling the membership of Mr. Li, ordering the company to restore his membership for an additional 96 days [1][17]. Group 1: Legal Proceedings - Mr. Li filed a lawsuit against Costco Nanjing after the company canceled his membership, claiming it constituted a fundamental breach of contract [1][17]. - The court found that Mr. Li's actions, including multiple complaints and claims for compensation, did not violate legal provisions and were not indicative of "profit-seeking" behavior [17][22]. - Costco argued that Mr. Li's frequent claims and complaints suggested he was not a typical consumer, but the court ruled that such behavior did not justify the cancellation of his membership [1][4][17]. Group 2: Membership Details - Mr. Li purchased a membership card for 199 yuan, originally priced at 299 yuan, with a validity period from May 28, 2024, to May 27, 2025 [1][3]. - The company canceled his membership on February 20, 2025, and refunded the membership fee, which Mr. Li contested in court [1][14]. - The court determined that Costco's cancellation of Mr. Li's membership was a unilateral termination of the contract, which was deemed a breach of contract [17][22]. Group 3: Company Defense - Costco claimed that Mr. Li's behavior, including 23 shopping trips and multiple claims totaling 280,000 yuan, indicated he was a "professional litigant" rather than a genuine consumer [4][6]. - The company also pointed to Mr. Li's history of complaints and lawsuits against various retailers as evidence of his non-compliance with membership rules [6][11]. - The court, however, ruled that the terms of membership that allowed Costco to deny entry were not adequately communicated to Mr. Li, thus invalidating the basis for cancellation [21][22].

Core Viewpoint - The court ruled that Costco (Nanjing) Company breached the contract by unilaterally canceling the membership of Mr. Li, ordering the company to continue fulfilling the membership contract and extend the membership validity by 96 days [1][14][18]. Group 1: Membership Cancellation Case - Mr. Li purchased a Costco membership card for 199 yuan, valid from May 28, 2024, to May 27, 2025, but was informed of the cancellation on February 20, 2025, with a refund of the membership fee [2][4]. - Costco argued that Mr. Li's frequent claims and complaints, totaling 280,000 yuan, indicated he was not a regular consumer but rather a "professional litigant" [4][10]. - The court found that Mr. Li's actions did not violate legal provisions and ruled that Costco's cancellation of his membership constituted a breach of contract [15][18]. Group 2: Legal Arguments and Court Ruling - Costco claimed that Mr. Li's behavior violated the principles of good faith, justifying the cancellation of his membership [14][15]. - Mr. Li contended that the clause allowing Costco to decide on consumer access was a format clause that excluded consumer rights and lacked proper notification, rendering it ineffective [14][18]. - The court determined that Costco's unilateral cancellation of the membership was a breach of contract, ordering the company to restore the membership validity for an additional 96 days and bear the case acceptance fee of 80 yuan [18].