Read the Google Search Quality Guidelines
Apparently this document was leaked and Google decided to rather step forward and make it public officially.
Google hires Quality Raters to evaluate search results. They decide if the results are great or the results doesn’t meet their expectations. Accordingly Google goes back to the drawing board and adapts the search engine algorithm.
And this document (which you can find here) outlines in detail what Google considers a great result or a bad result.
A must read for SEO Experts and everyone who is interested in how SEO works.