The Supreme Courts jurisprudence of P. R. 2003 2003 DTS 1.docx

The Supreme Court's jurisprudence of P. R. 2003
2003 DTS 121 LAS Marías REFRENCE LAB V.
MUNICIPALITY OF SAN JUAN 2003TSPR121
IN THE SUPREME COURT OF PUERTO RICO
Las Marías Reference Laboratory Corp.
Demandante-Recurrido
V.
Municipality of San Juan
Demandado-Peticionario
Certiorari
TSPR 2003 121
DPR 159 ____
Case Number: DC-2002-725
Date: July 15 2003
Circuit Court of Appeals: Regional Circuit I
Judge Rapporteur: Hon. Dolores Rodriguez of
Oronoz
Lawyers from the petitioner: Lcdo. Ivan Castro Ortiz
Lcdo. Simone Cataldi Malpica
Counsel for the defendant: Lcdo. Orlando Fernandez
Subject: collection of money, contract. Municipality not liable
for the debt. The non-referral of a municipal contract to the
Office of the Comptroller, as required by the Autonomous
Municipalities Law, makes this one ineffective and
unenforceable. Court orders that all municipalities regulate on
this area to comply with this requirement for bill and
recommends to the private parties to enforce this requirement of

law before making any delivery.
WARNING
This document is an official document of the Supreme Court
that it is subject to changes and corrections of the compilation
process and official publication of the decisions of the Court.
Its electronic distribution is done as a public service to the
community.
Court Opinion issued by the Judge associated JEHOVAH
CORRADA DEL RIO
San Juan, Puerto Rico on July 15 2003.
We must resolve if the non-referral of a municipal contract
to the Office of the Comptroller, as required by the Autonomous
unenforceable.
By understanding that compliance with this requirement is a
constitutive element of all municipal contract, resolve in the
affirmative.
I
Las Marías Reference Laboratory Corp. (Hereinafter, "Las
Marias") has filed a lawsuit in recovery of money against the
Municipality of San Juan (hereinafter, "the Village") by the
amount of $510,659.80 . [ 1] By the claim, the Marys argued
that the aforementioned debt arose from a contract it had signed
with the Municipality, in which this would provide clinical
laboratory services to indigent residents of San Juan. [ 2] The
alleged services were provided for various periods between the
1 of August 1994 and 30 June
1997. [endnoteRef:1][endnoteRef:2] [1: Footnotes
[ 1] The demand was presented on 28 August 1997.
See Appendix, p. 1.

] [2: [ 2] The services were provided to the patients of
programs such as "San Juan AIDS" and "Mental Health", as well
as other attached to the Department of Health of the Capital.
See petition for certiorari , p. 3.
]
Subsequently, the parties presented before the Court of First
Instance, Upper Chamber of San Juan (hereinafter, "TPI") a
stipulation of partial Judgment, through which they agreed that
the municipality would satisfy the amount of $244,544.50 in
partial payment of the amount owed. [ 3] As a result, the TPI
proceeded to sentencing by the partial amount stipulated, and
ordered the continuation of the procedures in relation to the
balance of the amount claimed.[endnoteRef:3] [3: [ 3] The
stipulation was submitted on 29 August 1997. See Appendix, p.
716.
]
After that event, the Municipality submitted its reply to the
demand. [ 4] In essence, claimed that the contracts signed
originally by the parties are not in dispute. However, seeks to
pay debts resulting from services that, defeated the original
settlements, the parties agreed to through a series of
letters.[endnoteRef:4] [4: [ 4] The answer was submitted on 3
November 1997. See Appendix, p. 5.]
As things stand, the Marys filed a motion for summary
judgment by reiterating the allegations outlined in its demand.
In support of such a request, was accompanied by a sworn
statement and other documents certifying a municipality's debt
up to $165,679.61 . In addition, included an account of the facts
that he understood they were not in dispute.
In disagreement, the Municipality submitted a motion in
opposition to the request for summary judgment, and requested
that could be resolved in your favor. To these effects, submitted
a audit report prepared by the signature Figueras & The Valley,

[ 5] which raises it does not come from the payment of the
invoices claimed in those cases where the extension or renewal
is made through letters that were not recorded in the Office of
the Comptroller, contrary to the provisions of the Law of
Autonomous Municipalities, 21 L. P. R. A. §
4001 [endnoteRef:5]et seq. In accordance with this report, the
Municipality claimed that the amount of the invoices that come
from legitimate be paid, be supported properly by written
contract and registered with the Office of the Comptroller, in
the amount of $42,755.80 . [5: [ 5] The study carried out by the
aforementioned signature was endorsed by the Las Marias.
See plea of the defendant, p. 2. In the same, Figueras & The
Valley study all of the invoices sent by the Marys to the
municipality, as well as the contracts, their records to the Office
of the Comptroller and documents related to the procurement
process from the auction of the service of laboratory testing for
several health facilities of the Municipality. See petition for
certiorari , p. 4.]
After several procedural steps, the CFI issued a ruling in favor
of the Marias the January 17, 2001 which was notified on
January 31 of that year. Using the same, said forum concluded
that the contracts, amendments and extensions existing between
the parties were valid contracts and in accordance with the law,
public order and morality. Furthermore, it argued that the fact
that the City violated its obligation to provide a copy of some of
the contracts to the Controller's Office, not invalidated for
annulment the agreements signed.
The Municipality appealed this decision to the Circuit Court of
Appeals (hereinafter, "ED" ). By judgment of 23 May 2003, [
6] the TCA ruled that there was no dispute about the validity of
contracts, and that could not be penalizing the Marys by the
omission of the Municipality in submission to the Office of the
Comptroller.[endnoteRef:6] [6: [ 6] The judgment was notified
on 5 June 2002. See Appendix, p. 673.]

Dissatisfied, the Municipality submitted a writ of certiorari in
this Court, in which she raised that:
[E]RRO the Honorable Circuit Court of Appeals to confirm the
judgment of the Court of First Instance ordered the payment of
invoices submitted by the defendant, even without a written
contract and registered with the Office of the Comptroller.
The Seaworthy resource through Resolution of November 1
2002. Perfected the same resolve.
II
The Art. 1 Of Act No. 18 October 30 1975, 2 L. P. R. A. § 97,
provides that:
[L]os departments, agencies, instrumentalities, offices and
any other organism and the municipalities of the Estado Libre
Asociado de Puerto Rico, without exception, shall keep a record
of all the contracts that accord, including amendments thereto,
and shall send a copy to the Office of the Comptroller within
fifteen (15) days following the date the awarding of the contract
or amendment. (Emphasis supplied).
For its part, the Art. Law 8,004 of Autonomous Municipalities
of Puerto Rico, 21 L. P. R. A. § slow 4354 expressed in the
relevant:
... .
[N]or shall authorize any disbursement related to contracts
without the record of having sent the contract to the Office of
the Comptroller of Puerto Rico, in accordance with the
provisions of the secs. 97 ET seq. of Title 2 and its regulation.
A comprehensive reading of the two provisions of law leads us
inexorably to the conclusion that no municipality will be able to
meet any debt that emanates from an agreement that has not
been registered and forwarded to the Office of the Comptroller.
[ 7] In fact, to interpret these provisions previously, we
mentioned that the same "reflect the legislative intent to create
a comparison mechanism [endnoteRef:7]and publicity of

contracts awarded by the municipalities, [ 8] [endnoteRef:8]that
is constitutive in nature with respect to the effectiveness of
these." Fernandez & Gutierrez v. Municipality of San Juan, 147
D. P. R. 824, 830 (1999) (emphasis supplied). Therefore, the
unenforceability of municipal contracts not forwarded to the
controller responds to the fact that they are not legally
considered sophisticated. That is to say, any covenant between a
private party and a municipality in which does not follow the
procedure stipulated by law is null. Hatton v. Municipality of
Ponce, 134 D. P. R. 1001, 1007 (1994). This postulate operates
regardless of whether the contract in question is a original
agreement, or an extension or renewal. See Fernandez &
Gutierrez v. Municipality of San Juan, supra , p. 832. [7: [
7] We have also established that for what was agreed to between
the private party and the municipality will be binding, it has
agreed to be formulated in writing, without exception.
Fernandez & Gutierrez v. Municipality of San Juan, 147 D. P.
R. 824 (1999); Hatton v. Municipality of Ponce, 134 D. P. R.
1001 (1994).
] [8: [ 8] The registration requirements and referral of the
contracts to the Office of the Comptroller are aimed at
preventing the payments and the fraudulent claims or illegal,
through the creation of a comparison mechanism that preserves
chronologically the circumstances of these agreements.
Hatton v. Municipality of Ponce, supra , p. 1006.]
The stringency of these precepts responds to the great interest
of the State in promoting a healthy and straight public
administration, preventing the waste, corruption and cronyism
in government contracting. Id.,at p. 829; Hatton v.
Municipality of Ponce, supra , 1006; Ocasio v. Mayor
of Maunabo, 121 D. P. R 37, 54 (1988); Morales v. Municipality
of Toa Baja, 119 D. P. R. 682, 693 (1987). To these effects, we
have expressed that "good administration of a government is a
virtue of democracy, and part of its good administration
involves carrying out its functions as a buyer with efficiency,

honesty and correction to protect the interests and money of the
people to which the government represents." Fernandez &
Gutierrez v. Municipality of San Juan, supra , p. 829; Mar Co. ,
Inc. , v. General Services Administration, 126 D. P. R. 864, 871
(1990).
In addition, we have clearly established that these rules are
there to "protect the public interest and not to the contracting
parties." Hatton v. Municipality of Ponce, supra , p. 1011
(emphasis supplied). In accordance with this principle, has
been implemented this regulation of inflexible way, be
presumed that the parties contracting with a municipality are
aware of the need to conduct themselves in accordance with
these specifications. Id As a result, we have determined the
inapplicability of any remedy in equity, as for example, unjust
enrichment, in favor of any private party who contracts with a
municipality and damage by not adhering to the established
rules. See Fernandez & Gutierrez v. Municipality of San Juan,
supra , p. 833; Hatton v. Municipality of Ponce, supra , p. 1010-
1012. So any time that is doctrine reiterated that such remedies
shall not apply when it is contrary to a clear public policy
embodied in a statute or the Constitution. See Hatton v.
Municipality of Ponce, supra, p. 1010; Morales v. Municipality
of Toa Baja, supra , pp. 684-685. [ 9][endnoteRef:9] [9: [ 9] to
establish this criterion, we express in Hatton, supra , page 1012,
that "we refuse to raise a range of judicial precedent acts
carried out against laws that embody fundamental principles of
healthy public policy and administration of public funds. In the
strongest terms we reject this claim" (emphasis in original).
]
Finally, we have emphasized that the faithful compliance with
the aforementioned formal requirements still apply when there
is a "real state of emergency," duly proclaimed by the Mayor or
the Governor of Puerto Rico. See Hatton v. Municipality of
Ponce, supra , pp. 1005-1009. [ 10] The purpose is to "prevent
the states of emergency - either real or fictitious are poorly used

by municipal officials and third persons." [endnoteRef:10]Id.,at
p. 1008. We reiterate that reasoning in Fernandez & Gutierrez v.
Municipality of San Juan, supra , pp. 829-831, where we
explained that the formal requirements of municipal contracts
cannot be ruled out "even in cases of emergency", since they are
essential "to prevent the waste, corruption and cronyism" in a
type of business that "this coated of the highest public interest."
[10: [ 10] We discussed in Hatton, supra , pp. 1005-1009, that
in cases of real emergency, requiring immediate action, the
mayor may obviate carry out the procedure for auction.
However, we decided that even in such cases we cannot dismiss
the formalities which govern the contractual relations between
private entities and the municipalities.]
Thus, in situations such as cars, the courts must be vigilant to
avoid ridicule legal provisions aimed at ensuring the most
healthy public administration. Hatton v. Municipality of Ponce,
supra , p. 1001. Corresponds to the judicial forums discuss these
situations with extreme caution to make sure that you have fully
complied with the rules laid down for the disbursement of
public funds. Ocasio v. Mayor of Maunabo, supra, p. 54.
Under this legal framework, we analyze the controversy before
us.
III
Arises from the parties' arguments that there was a series of
contracts between the Municipality and the Marys that were not
sent to the Office of the Comptroller, contrary to what clearly
sets out the law. The Marias, however, argues that this is not an
obstacle to the enforceability of these agreements, because "the
obligations that collapses a municipality is governed by civil
law principles and the general theory of contracts," so that "the
absence of a specific form or format" did not vitiate the
invalidity of agreement. [ 11] also argues that "it was not his
responsibility the record contracts in the Office of the
Comptroller" , [ 12] and that "no case establishes that not
recording contracts with the Comptroller vitiates the validity of

the same. " [ 13] Finally, Las Marías appeals to the equity,
highlighting the alleged exceptional situation in which he was, [
14] and explaining that it would be unfair for the municipality
will benefit For their own compliance with the law. There is no
reason the
Marias.[endnoteRef:11][endnoteRef:12][endnoteRef:13][endnot
eRef:14] [11: [ 11] See plea of the defendant, pp. 4-5.
] [12: [ 12] Id ,the p. 6.
] [13: [ 13] Id.
] [14: [ 14] The Marias alleges that "disservice would have
given if he was required when processing laboratory samples
had refused ... because I didn't know and had no record that the
Municipality had registered the contracts and letters with the
Comptroller." Id.]
As we will explain in the previous section, the public policy set
out in our legal system requires that the contractual relationship
between private and municipal entities is carried out according
to the relevant laws. Thus, as a constituent element of all
municipal contract, the law requires, inter alia , that this
registration and copy of the same to the Office of the
Comptroller. The comply with that mandate overrides any
agreement between the parties, as the language of the law is
clear in stating that such a requirement not admit "exception,"
also be assumed that the contractor knew, or should know, on
that requirement. Fernandez & Gutierrez v. Municipality of San
Juan, supra , p. 830. Similarly, in response to the substantial
public interest involved, we have solved the inapplicability of
remedies in equity for cases such as the cars. Hatton v.
Municipality of Ponce, supra , p. 1010-1012.
This situation is particularly emblematic as that Las Marías had
previously done business with the Municipality, and should
know the regulations in force for this type of recruitment. In
spite of this, rest on a series of letters in an attempt to renew
the contracts, knowing, or should know, that those documents,
without more, were insufficient to create binding obligations

with the Municipality. See Fernandez & Gutierrez v.
Municipality of San Juan, supra , p. 14. All private contracting
you must know that, when doing business with a municipality,
the agreements reached should be reduced to a written contract ,
this has to be recorded , and copies of the same has to be
referred to the Office of the Comptroller within fifteen (15)
days following its issuance.
Therefore, Las Marías was driven in a more proactive way to
recruit with the Municipality, and must check it has complied
with the minimum requirements for the enforceability of the
agreed services. In providing services to the municipality
without pointing out that the agreements had been refined in
accordance with the law, Las Marías caused its own
impoverishment. See e.g. Hatton v. Municipality of Ponce,
supra, p. 1011.
IV
Notwithstanding the foregoing, we are concerned at the
possibility that some municipalities hide behind the rigorous
regulations which supports the recruitment municipal to take
advantage of situations in which private parties have entrusted
or presumed that these comply with his ministerial
responsibility. The object of our concern includes both those
cases in which the municipality does not meet their obligation
through carelessness or negligence, such as those in which
intentional and culpably not be satisfied with the processing
required for the proper formation of the contract. We
understand that the potential harms the public interest, not only
because it affects the legal and commercial traffic, but it also
undermines the credibility of the government in the business.
This uncertainty, in turn, ends up affecting the services that are
owed to the people, because the vendors serious and quoted opt,
at least limit their business with the municipalities. For this
reason, then we look what we believe is a desirable practice, as
well as other similar cases of municipal procurement, which
will encourage compliance with the provisions of the Law of
Autonomous Municipalities.

First of all, the municipalities should not demand the execution
of services without having certified to the private party to the
agreement was reduced to a written contract, which was
registered, and that is forwarded a copy of the same to the
Office of the Comptroller in accordance with the law. [ 15] The
aforementioned certification carefully detailing the
Damnificados, especially relevant to the remission of the
contract to the Office of the Comptroller, specifying, as a
minimum, the date, time and registration number of the same in
that office. [ 16] This procedure should be observed even in
cases of emergency. [
17][endnoteRef:15][endnoteRef:16][endnoteRef:17] [15: [
15] that is to say that refined the contract in accordance with
the law, and that the same is required.
] [16: [ 16] In addition to the registration number in the Office
of the Comptroller, the certification would consign that the
Executive Director of the municipal department contractor
assigned to each contract awarded the corresponding number in
the register of contracts of the municipality.
Also, that the Legal Advisors of the grantor department
reviewed the contract and departmental certification,
determining that the same comply with all state and federal laws
and regulations, and ordinances, executive orders , regulations,
circular letters, resolutions and with any other criteria and
provisions that may apply, making it stated in the contract and
departmental certification through its positive discharge.
] [17: [ 17] This process must be implemented subject to the
provisions for cases of emergency recruitment by the
Autonomous Municipalities Law, supra, and resolved in the case
of Hatton v. Municipality of Ponce, supra , p. 1005-1009, and
its progeny. In Hatton, to discuss the application of the legal
requirements of the municipal recruitment to atypical cases, we
express that, given the public interest that underlies these
standards, the same "cannot be dismissed, even in situations
that require some meritorious flexibility, such as the acquisition

of goods and services in cases of emergency and other
exceptional circumstances." Id.,at p. 1005 (emphasis supplied).
]
We also understand that private parties should exert a more
active role in contracting with the municipalities. Any time that
non-governmental entities that contract with the municipalities
are not exempt from the law,it would be prudent for these
require of the municipalities that certification before making
any delivery. In this way, the part that is private crossing of
arms and services without requiring proof that the government
failed in its duty, it is risking to take responsibility for their
losses.
On the other hand, we believe that it is appropriate for all the
municipalities adopt regulations--or amend that this force--for
the purpose of incorporating what was suggested in this view, or
similar measures, as well as to establish adequate internal
systems to establish controls to ensure compliance with the law
in all kinds of recruitment in which they are party. [ 18]
[endnoteRef:18] [18: [ 18] The Autonomous Municipalities
Law also makes an appeal to these effects, the express in its art.
8,010 (D) that:
[L]os procedures in order to incur expenses and pay for them, to
receive and deposit funds municipal public and for controlling
and accounting for municipal public property will have
adequate controls and sufficient to prevent and hinder
irregularities. Also, which of these committed, is to be able to
discover and fix responsibilities, and to ensure, in addition, the
clarity and purity in the tax procedures. 21 L. P. R. A. § 4360
(d) (emphasis supplied).
]
We understand that the proceeding in accordance to the above
delineated--on the part of the municipality and the private
party--it is advisable to avoid continuing cases such as the
present. In this way is achieved a greater transparency in public

administration, at the same time that promotes the stability,
certainty and credibility in the municipal staff. The beneficiary
is greater, therefore, the public interest.
V
For the reasons set forth above, we solve that are null all those
agreements signed between the Marias and the municipality
in which it is not complied with the requirement to send the
same to the Office of the Comptroller. As a result, the
Municipality did not pay any amount of public funds to satisfy
debts arising out of such covenants. It revokes the judgment of
the TCA and returned the case to the ICC to continue the
proceedings pursuant to the provisions contained herein.
Judgment will be in accordance.
Baltasar Corrada del Rio
Associate Judge
Judgment
San Juan, Puerto Rico, on 15 July 2003.
For the reasons set forth in the foregoing Opinion,
which is made form integral part of this, resolve that are null all
those agreements signed between the Marias and the
municipality in which it is not complied with the requirement to
send the same to the Office of the Comptroller. As a result, the
Municipality did not pay any amount of public funds to satisfy
debts arising out of such covenants. It revokes the Judgment of
the Circuit Court of Appeals and returned the case to the Court
of First Instance to continue the proceedings pursuant to the
provisions contained herein.
You said, send the Court and certifies the Undersecretariat of
the Supreme Court. The Associate Judge Mr
Fuster Berlingeri attends without written opinion. The Presiding

Judge Mr Andreu Garcia does not intervene. The Associate
Judge Mr Rivera Perez did not intervene.
Carmen E. Cruz Rivera
Assistant Secretary of the Supreme Court
Presione Aquí para regresar al Menú anterior y seleccionar otro
caso.
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ERIM REPORT SERIES RESEARCH IN MANAGEMENT
ERIM Report Series reference number ERS-2002-61-ORG
Publication 2002
Number of pages 31
Email address corresponding author [email protected]
Address Erasmus Research Institute of Management (ERIM)
Rotterdam School of Management / Faculteit Bedrijfskunde
Rotterdam School of Economics / Faculteit Economische
Wetenschappen
Erasmus Universiteit Rotterdam
P.O.Box 1738
3000 DR Rotterdam, The Netherlands
Phone: +31 10 408 1182
Fax: +31 10 408 9640
Email: [email protected]
Internet: www.erim.eur.nl

Bibliographic data and classifications of all the ERIM reports
are also available on the ERIM website:
www.erim.eur.nl
A study on the applicability of SERVQUAL dimensions for
web sites
Jos van Iwaarden and Ton van der Wiele
http://www.erim.eur.nl/
ERASMUS RESEARCH INSTITUTE OF MANAGEMENT
REPORT SERIES
RESEARCH IN MANAGEMENT
BIBLIOGRAPHIC DATA AND CLASSIFICATIONS
Abstract A survey has been undertaken amongst students of two
universities (Erasmus University
Rotterdam, The Netherlands, and Northeastern University
Boston, USA) to study what quality
factors are perceived as important in relation to their use of web

sites. The results of the
questionnaire survey are analysed in relation to the five service
quality (SERVQUAL)
dimensions (tangibles; reliability; responsiveness; assurance;
empathy) as developed by
Zeithaml et al [1]. There is evidence that the same dimensions
are applicable to E-Business,
although the underlying aspects have to be specified within the
E-Business context.
5001-6182 Business
5546-5548.6
5548.7-5548.85
Office Organization and Management
Industrial Psychology
Library of Congress
Classification
(LCC)
HD 66+ Quality Management
M Business Administration and Business Economics
M 10
L 2
Business Administration: general
Firm Objectives, Organization and Behaviour
Journal of Economic
Literature
(JEL)
M 19 Business Administration: Other
85 A Business General
100B

240 B
Organization Theory (general)
Information Systems Management
European Business Schools
Library Group
(EBSLG)
260 G Quality management
Gemeenschappelijke Onderwerpsontsluiting (GOO)
85.00 Bedrijfskunde, Organisatiekunde: algemeen
85.05
85.08
Management organisatie: algemeen
Organisatiesociologie, organisatiepsychologie
Classification GOO
85.12 Kwaliteitsmanagement
Bedrijfskunde / Bedrijfseconomie
Organisatieleer, informatietechnologie, prestatiebeoordeling
Keywords GOO
E-busienss, Kwaliteitszorg, Websites
Free keywords E-Business; Web Quality Factors; Survey
Research; SERVQUAL

1
A study on the applicability of SERVQUAL dimensions for
web sites
Jos van Iwaarden and Ton van der Wiele
Erasmus University Rotterdam, Room H15-28, PO Box 1738,
3000 DR Rotterdam, The Netherlands
Tel. +31 10 4081354, Fax +31 10 4089169
E-mail: [email protected] or [email protected]
Abstract: A survey has been undertaken amongst students of
two universities (Erasmus University
Rotterdam, The Netherlands, and Northeastern University
Boston, USA) to study what quality factors
are perceived as important in relation to their use of web sites.
The results of the questionnaire survey
are analysed in relation to the five service quality
(SERVQUAL) dimensions (tangibles; reliability;
responsiveness; assurance; empathy) as developed by Zeithaml
et al [1]. There is evidence that the
same dimensions are applicable to E-Business, although the
underlying aspects have to be specified
within the E-Business context.
Keywords: E-Business; Web Quality Factors; Survey Research;

SERVQUAL
1. INTRODUCTION
E-Business is one of the major buzzwords these days. In recent
years a hype has been created
around E-Business. Companies were considered to be hopelessly
old fashioned if they did not
spend millions of euros on web sites and E-Business strategies.
The companies of the "new
economy" seemed to determine the future of business. Money
for investments was almost
freely available and profits did not seem to matter to anybody
(including investors). When the
mailto:[email protected]
mailto:[email protected]
2
hype was at its peak profitable companies of the "old economy"
risked to be taken over by the
Internet companies of the "new economy". Companies whose
only assets were a web site and
a warehouse had a market value that exceeded the market value
of many established

multinationals even though they never made any profits.
In 2001 this bubble burst. The equity value of the Internet
companies collapsed like a house
of cards. For venture capitalists and other investors in Internet
companies it became clear that,
in the end, all companies have to make profits to survive, even
in the "new economy". Since
that moment it got harder and harder for Internet companies to
get money from investors. This
led to a huge number of bankruptcies amongst these companies
[2].
Now that the hype is over it is becoming clear that E-Business
is here to stay. Despite all the
bankruptcies of Internet companies there is a huge growth of
trade over the Internet.
Traditional companies of the "old economy" turn out to be the
new engine behind E-Business.
These companies are procuring and selling more and more
products and services over the
Internet. Trade over the Internet between businesses is expected
to grow from $43 billion in
1998 to $1.3 trillion in 2003 [3]. This may or may not be an
exaggeration but the fact is that
the growth in E-Business is tremendous. By 2004 total trade

over the Internet is expected to
grow to more than $7 trillion [4]. The number of Internet users
is also increasing. By the end
of 2001 a record half billion people worldwide had Internet
access from their homes [5]. This
number is expected to grow to almost one billion in 2005 [6].
The investments in information
technology (IT) do not seem to decline either. From a recent
Dutch survey can be concluded
that investments in IT are stable at the level of previous years.
What has been learnt from past
experience is that investments in IT should be broader than just
equipment and the IT
department. There is a tendency to include more different
groups of management in the IT-
strategy. This is a direct result of a shift in emphasis from
efficiency improvement to
improvements in service and quality of information supply to
the customer [7].
3
Just like in the bricks and mortar world companies have to offer
excellent service on the web.

Web sites will become very important to companies as more
products and services will be
bought either over the Internet or by making use of the Internet
before purchasing in a bricks
and mortar store. Therefore companies need to have web sites
that live up to customers’
expectations. How do customers distinguish a good web site
from a bad one? What factors
determine the quality of a web site?
2. CUSTOMER SATISFACTION
You could wonder why companies should offer high quality web
sites, or why companies
should offer quality in general. The reason why companies offer
quality is to satisfy the
customer [8]. Because a web site is part of the connection
between a company and its
customers, it is evident that it should reflect the quality efforts
that are in place throughout the
company. Besides this reason there is another reason why a
company should provide high
quality web sites to its customers: there is no human contact
through web sites. The
interaction via the Internet between a company and a customer

is always through technology
and not through human interaction. This means the ‘moment of
truth’ between a company and
a customer is the web site and not human contact. Although
companies may try to emulate
human interaction with technology it stays different because
some aspects of human
interaction cannot be replaced with technology, e.g. courtesy,
friendliness, helpfulness, care,
commitment, flexibility and cleanliness [9]. The absence of
these aspects of human
interaction through which quality can be delivered to customers
will have to be compensated
by better performance on other quality factors or by excellent
performance on ‘new’ specific
web quality factors.
A key aspect in customer satisfaction is the way a customer can
get satisfied or dissatisfied
with a company’s service. If a company wants to satisfy its
customers the first problem it
needs to solve is what it is that satisfies customers and, equally
important, what it is that
makes customers dissatisfied with the company and its products
and services. If customers are

4
satisfied or not, depends on the balance between customers’
expectations and customers’
experiences with the products and services [1]. When a
company is able to lift a customer’s
experience to a level that exceeds that customer’s expectations,
then that customer will be
satisfied.
Because customers have ever increasing expectations it is
necessary for companies to
continuously improve their quality and hence customers’
experiences with the company. The
issue is what should be improved to keep the customers
satisfied. What customers experience
is not just one simple aspect of a company but a whole range of
aspects. Some of these
aspects are concerned with the way customers experience the
company itself, some are
concerned with the way customers experience the physical
product and, finally, some are
concerned with the way customers experience the service the

company offers.
Comparing customers’ expectations and their perceptions of
actual performance can be done
by making use of the SERVQUAL scale of Berry, Parasuraman
and Zeithaml [1]. This scale
has been developed for the service sector. It has five generic
dimensions or factors:
• Tangibles: Physical facilities, equipment and appearance of
personnel
• Reliability: Ability to perform the promised service
dependably and accurately
• Responsiveness: Willingness to help customers and provide
prompt service
• Assurance (including competence, courtesy, credibility and
security): Knowledge and
courtesy of employees and their ability to inspire trust and
confidence
• Empathy (including access, communication, understanding the
customer): Caring,
individualised attention the firm provides its customers
In the SERVQUAL instrument, 22 statements measure the
performance across these five
dimensions. For each statement the expectation and the
experience of a customer is

determined.
5
Although there is some criticism on the long-term stability of
the results of the SERVQUAL
scale [10] and on the general applicability of the five
dimensions [11], it is widely used by
academics and practitioners to measure service quality.
3. SERVQUAL DIMENSIONS IN RELATION TO E-BUSINESS
3.1. Tangibles
Aspects in the tangibles factor are e.g. ‘has up-to-date
equipment’, ‘physical facilities are
visually appealing’ and ‘materials are visually appealing’.
These aspects might be even more
important in E-Business as there is no face-to-face contact
between the customer and an
employee. The visual aspects of the equipment (i.e. the web
site) are the only visual contact
there is between a customer and an organisation. Therefore the
need to have well functioning,
good-looking web sites is paramount. There are a great number

of customers that abandon
their shopping carts on the Internet because they get frustrated
with the technology and the
design and lay out of the web site interface [12].
The visual aspects of web sites are also judged differently by
people of different age. While
young people may be attracted by flashy graphics and sounds
and a high-speed interface,
older people don’t want blinking texts that are hard to read or
animations that distract from
the use of the web site [13]. Although a number of web sites
offer users the opportunity to
customise the web site to their needs, this customisation process
is mostly aimed at the
content of the web site and not at the graphics, animations and
sounds.
3.2. Reliability
Some of the aspects in the reliability factor have to do with
‘doing what is promised’ and
‘doing it at the promised time’. Although many organisations
seem to think that the major
reason why customers shop via the Internet is because of the
low prices, this does not always

need to be the case. Some organisations found out the hard way
that there are also a lot of
customers shopping via the Internet because of convenience
considerations [14]. If customers
6
cannot trust an organisation to do what they ask for, then those
customers will be dissatisfied.
Priceline for example ran into big problems by the end of 2000
because of its focus on the
lowest prices. People could buy a plane ticket at a very low
price but because of possible
inconvenient flying times there was a big risk for customers.
This resulted in dissatisfied
customers that were happy to trade off Priceline’s discounts for
the convenience of a
competitor [14].
3.3. Responsiveness
One of the aspects in the responsiveness factor is ‘gives prompt
service’. The amount of time
it takes to download a web page appears to be of great
importance to users of the Internet.

Research in 1999 found that fewer than 10% of users leave a
web site if page response time is
kept under seven seconds. However, when it rises above eight
seconds 30% of users leave.
When delays exceed twelve seconds a staggering 70% of users
leave a web site [9]. It can be
assumed that nowadays people expect web sites to be even
quicker than in 1999 because of
technological advances. So, it is very important for
organisations to have a web site that is
quick, but on the other hand users expect web sites to be
visually appealing. As the number
and size of animations, pictures and sounds increase to make a
web page more visually
appealing, the time it takes to download that web page will
increase also, which is judged
negatively by users. So, there is a trade of between the looks of
a web site and the speed of
that site. Organisations will have to try to find the right balance
between good looks and
speed.
The trade of between looks and speed is complicated by
companies’ demand that their web
sites convey the corporate image [15]. The design department of

a company wants web pages
to be easily recognisable as belonging to that company. In their
view web pages have to
display company and product logos as well as other graphics
that underscore the corporate
identity. These graphics add to the overall size of web pages
and thereby increases the
download time for Internet users. It is questionable weather
users are willing to accept slower
7
pages in return for more logos and graphics that do not improve
the functionality of the web
site (although they might improve the visual appeal).
3.4. Assurance
One of the aspects in the assurance factor is ‘knowledge to
answer questions’. Customers
expect to find everything they want on a web site. In a bricks
and mortar store people feel
comfortable with a limited inventory. On the Internet people are
not satisfied if they cannot
find everything they want. Web shops need to have great depth

of inventory and rich and
relevant product information [16].
Two other aspects in the assurance factor are ‘employees can be
trusted’ and ‘feel safe in your
transactions with employees’. Firstly, there is the risk for users
to share personal information
with an organisation they do not know. Research on this topic
[17] shows that at least fifty
percent of users are very concerned about: misuse of credit card
information given over the
Internet; selling or sharing of personal information by web site
owners; and cookies that track
customers’ Internet activity.
Secondly, the same research shows that two in three active web
users typically abandon a site
that requests personal information and one in five has entered
false information to gain access
to a web site. Aspects in the assurance factor that could be very
important in E-Business are
[18]:
• Availability of a formal privacy and confidentiality policy on
a web site
• Secured access to a web site (that customers are prompted to

acknowledge)
• General reputation of supplier
• Certifications or guarantees of assurance
• Reports of experiences of other customers
8
The first aspect in this list is also acknowledged by the
International Organizations for
Standardisation in Geneva. The Code of Practice for
Information Security Management
(ISO/IEC 17799:2000) provides a basis for establishing and
maintaining the means of
handling sensitive data [18].
Certifications and guarantees of assurance are also important in
E-Business. More and more
organisations are trying to obtain certification to an objective,
consensus-based standard, just
like they did earlier with quality management standards [18].
These organisations are
becoming aware of the advantages of such certification in
relation to customers’ trust in these

organisations.
3.5. Empathy
In the dimension of empathy there are several aspects that are
usually not found on a web site.
Because of the fact that there is no human interaction, web sites
normally do not offer
personal attention or have your best interests at heart.
According to some this is a major flaw
in web site design. Some companies are developing technology
to make the web experience
much more like real life. Already a lot of web sites have a
design that can be personalised by
the users of these sites, so people can have their own version of
the web site. This kind of web
site design is aimed at giving users the experience of getting
personal attention. The idea is
that the more a web site is tailored to a particular customer’s
needs, the more likely that
customer is to come back again and again [19]. The most
advanced technologies in this area
aim to create a face-to-virtual-face interaction. A friendly
looking face of a virtual assistant on
your screen is supposed to make customers feel more
comfortable. With the use of artificial

intelligence the virtual assistant can suggest products or
services that might be of interest to a
customer based on previous purchases and on reactions to the
questions of the virtual
assistant. The latter possibility of asking users of a web site
questions via a virtual assistant
will enable companies to tailor their offerings to the wishes of
the user to prevent customer
9
dissatisfaction. The only purpose of all these technological
gadgets is just to add one of the
web’s key missing ingredients: warmth [19].
3.6. Other aspects
It seems that most of the factors and aspects that have been
defined for general service
environments are also important in E-Business. Besides the five
factors as defined by Berry,
Parasuraman and Zeithaml [1], empirical evidence might come
up with more specific
dimensions related to E-Business. Some research has been done
in this area [20, 21 22, 23,

24, 25, 26, 27, 28, 29], however more research is needed [9, 20,
22, 24, 30, 31, 32].
Table 1 provides an overview of research, both theoretical as
well as empirical, that has been
conducted on web quality factors. The leftmost column shows
the five factors as defined in
the SERVQUAL scale [1]. The five SERVQUAL factors are all
displayed in italics typeface
to visualise the resemblance between the SERVQUAL scale and
the publications on web
quality. If the authors of a paper use a different name for one of
the SERVQUAL factors, then
that name is replaced by the SERVQUAL factor’s name for a
better comparison of the
factors. If the authors of a paper split up one of the SERVQUAL
factors in two or more
separate factors, then those factors are grouped together and
named after the appropriate
SERVQUAL factor.
The publications on web quality in table 1 are all papers from
international academic journals
and conferences in the field of E-Business and quality
management.

Table 1: Overview of web quality factors by author
10
From table 1 can be concluded that only Madu and Madu [24]
mention all SERVQUAL
factors. This is however no coincidence because Madu and
Madu based their paper on the
SERVQUAL scale and another quality model. Another paper
that contains the majority of the
SERVQUAL factors is the paper by Zeithaml [22]. This is of
course because she is one of the
developers of the SERVQUAL scale. Zeithaml [22] states that
although empathy is an
important factor in general bricks and mortar services, it is not
an important factor in E-
Business. Ranganathan and Ganapathy [26] and Wan [27] both
contain three of the five
SERVQUAL factors (although only the reliability factor appears
in both papers). It can also
be concluded that two of the five SERVQUAL factors appear in
most web quality papers:
these are tangibles (in seven papers) and reliability (in six

papers).
Only Zhang and von Dran [28] and Bhatti et al. [29] do not
mention any of the five
SERVQUAL factors. The other publications on web quality
factors mention at least one of
the SERVQUAL factors but they also mention at least one other
factor.
It is also worth noting that the paper by Zhang and von Dran
[28] is of a different abstraction
level than the other publications in table 1. All the other
publications aim to develop a list of
rather concrete web quality factors while Zhang and von Dran
[28] are looking for the more
emotional and motivational aspects behind the concrete web
quality factors. Zhang and von
Dran [28] define only three factors: the basic factor, the
performance factor and the exciting
factor. These factors represent the customers’ emotions when
using web sites. The basic
factor consists of aspects that customers will not notice unless
they are missing, the
performance factor consists of aspects that customers will
explicitly look for and they will
always be noticed (whether they are missing or not), the

exciting factor consists of aspects
that will excite the customer when they are available, but their
absence will not be noticed by
customers. This is quite a different approach to the problem of
web site quality than the other
papers. It is however not clear what concrete aspects fit in any
of the three factors of Zhang
and von Dran [28].
11
4. RESEARCH METHODOLOGY
The empirical research is conducted by means of a
questionnaire survey because this makes it
relatively easy to study the perceptions and opinions of a large
group of people in a limited
time frame and at low costs. The survey is undertaken under the
student population of the
Erasmus University Rotterdam (EUR), The Netherlands, and
amongst students at
Northeastern University (NEU), Boston, USA. Students are
expected to be familiar with E-
Business and the Internet. Students received an e-mail with a

hyperlink to the web site
containing the questionnaire. They can fill out the questionnaire
electronically and respond by
clicking a submit button.
The purpose of the questionnaire survey is to develop empirical
evidence on the quality
factors of web sites that are important in the eyes of a group of
people that is familiar with the
Internet and that makes often use of it. The questionnaire
consists of the following questions:
• Personal information (gender, age, university, academic
discipline)
• Respondents’ use of Internet (equipment, frequency of use)
• Specific web sites that are visited by respondents (a
predefined list of 20 categories of
web sites)
• Aspects of web quality (a predefined list of 50 aspects)
5. SURVEY RESULTS
5.1. Sample and response rate
At the Erasmus University Rotterdam 5,000 students got an
email with a hyperlink to the
questionnaire. At Northeastern University 6,000 students got an

email.
12
The response rate for the direct mailings to students is rather
low (5% of the number of emails
send out), however, the total number of respondents is still very
acceptable for doing
statistical analysis.
5.2. Descriptive statistics
In table 2 and 3, the sample is described in terms of gender and
age respectively.
Table 2: Number of respondents by gender
Table 3: Number of respondents by age
Especially the respondents of Northeastern University show a
wide spread over academic
disciplines and, judged by the age of the respondents, more
students are at the undergraduate
level; in Rotterdam, students have only be approached in areas
of economics and

management.
Table 4 shows the respondents’ use of the Internet in terms of
the quality of their own
equipment and table 5 summarises the frequencies of their
Internet visits.
Table 4: Satisfaction of respondents with the equipment they
use
Table 5: The use of the web
13
It is interesting to note the types of web sites that are used most
often by our respondents (see
table 6). The types of web sites that are used most often are:
search engines, university sites,
daily news and entertainment sites; web sites that are used less
frequently are: E-shops and
chat rooms. Sites with stock exchange information are not
visited very often either, not even
by the students in economics and management from Rotterdam.

Table 6: Websites ranked by overall frequency of visits
Factor analysis on the data covering the types of web sites that
are visited by respondents
(Principal Component Analysis, Varimax rotation with Kaiser
Normalization, KMO=0.83)
shows there are five clear factors or groups of web sites that
cluster together:
1. E-shop sites for books, music, movies etc (Cronbach’s alpha
= 0.75, n = 5)
2. Sites related to university and study information (Cronbach’s
alpha = 0.64, n = 5)
3. Sites with games, entertainment and sport (Cronbach’s alpha
= 0.66, n = 4)
4. Sites with company information, stock information and
banking sites
(Cronbach’s alpha = 0.69, n = 3)
5. Sites with more general information, like daily news, travel,
libraries, and search
engines (Cronbach’s alpha = 0.58, n = 4)
In table 7 (top ten) and table 8 (bottom ten) the importance
(expectations) and the satisfaction
(experiences) are summarised on predefined aspects related to

the quality of web sites. Tables
7 and 8 also show the gaps between experiences and
expectations (satisfaction minus
importance). It can be concluded that the gap is widest for the
aspects respondents perceive as
most important.
14
Table 7: Importance of, and satisfaction with aspects of web
quality
quality
Most of the aspects in table 7 seem to relate to reliability issues
in pure e-commerce.
Customers that buy a product on the Internet want web sites and
the organisations behind
them to be trustworthy. E-commerce web sites need to be fast,
simple and always available.
Customers want a clear overview and confirmation of what they
bought and what they have to

pay for.
A lot of the aspects in table 8 seem to relate to extra service and
information that is provided
to the customer. Apparently respondents do not find these extras
very important in their use of
the Internet. The only aspect in table 8 with a positive delta is
‘brand image is important’. The
importance of this aspect is very low according to the students
in the questionnaire survey.
This is something I did not expect. Although respondents find
reliability aspects most
important (see table 7), they do not include brand image in their
list of reliability aspects.
Respondents seem to judge the reliability of a web site and the
organisation behind it on other
aspects than brand image.
Confirmative factor analyses are used to verify the existence of
the five dimensions according
to the SERVQUAL scale [1]. Table 9 compares the results of
the confirmative factor analysis
on expectations (KMO=0.91) with the confirmative factor
analysis on experiences
(KMO=0.93).

The five factors on the importance of web quality aspects
(expectations) are very similar to
the five factors of the SERVQUAL scale (see the left column of
table 9). The majority of the
15
variables in each of the factors resemble the items of the
SERVQUAL scale in the
corresponding factor.
The five factors on the satisfaction with web quality aspects
(experiences) are also very
similar to the five factors of the SERVQUAL scale (see the
right column of table 9). The five-
factor analyses of importance and satisfaction are virtually the
same. The number and ranking
of variables per factor differ slightly, but the variables with the
highest factor loadings are in
both cases (importance as well as satisfaction) in the same
factor.
Table 9: Confirmative factor analysis (5 factor solution)

6. CONCLUSION AND FURTHER RESEARCH
The SERVQUAL scale proves to be a useful starting point in
the development of web quality
factors. Both theory as well as empirical research support the
validity of the SERVQUAL
scale in E-Business environments.
Theory on web quality factors was by and large in agreement
that the five SERVQUAL
factors (tangibles, reliability, responsiveness, assurance and
empathy) are important in the
field of E-Business. However, theory suggested that there are
also other factors that are
important in the field of E-Business, but there was no agreement
on the number and contents
of those other factors. Although the number of possible other
factors was quite large, there
were virtually no similar factors that could be found in multiple
publications on web quality
factors.
16

The empirical research also supports the use of the SERVQUAL
scale in the field of E-
Business. From the statistical analyses it became clear that the
factors that are important in
determining the quality of web sites are similar to the factors
(as developed by Berry,
Parasuraman and Zeithaml) that determine service quality in the
bricks and mortar world.
So far, it can be concluded that the quality dimensions
developed by Berry, Parasuraman and
Zeithaml for service environments are equally useful in E-
Business.
It is important to verify the results of the empirical research by
using other samples than
students. Students may be in some way biased in their approach
to E-Business.
The empirical research focussed on web sites in general,
regardless of the purpose of those
web sites. It may be useful to conduct a similar study about
specific types of web sites (like e-
shops, entertainment sites, banking sites, etc.). To some types
of web sites specific factors
could apply that remained invisible in the research.

Acknowledgement
This project has been supported by the Foundation ‘Vereniging
Trustfonds Erasmus Universiteit
Rotterdam’ in The Netherlands, through the Rotating Chair for
Research in Organisation and
Management. We also thank Robert Millen of Northeastern
University for support in data gathering.
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17
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18
Authors
Jos van Iwaarden studied business economics and completed his
masters thesis on web
quality factors in June 2002. Thereafter he started a four-year
PhD program at ERIM

(Erasmus Research Institute in Management) at Erasmus
University Rotterdam.
Ton van der Wiele is Associate Professor in Quality
Management and Organisational
Performance at Erasmus University Rotterdam. His main
research interests are in Quality
Management, Organisational Performance Improvement and the
effects of E-Business on
Business & Management. He publishes papers in various
international journals.
19
Table 1: Overview of web quality factors by author
Z
ei
th
am
l e
t a
l.,

19
90
A
la
dw
an
i a
nd
P
al
vi
a,
2
00
2
Fi
nk
a
nd
L
au
pa

se
, 2
00
0
M
ad
u
an
d
M
ad
u,
20
02
O
ls
in
a
et
a
l.,
1

99
9
R
an
ga
na
th
an
a
nd
G
an
ap
at
hy
, 2
00
2
W
an
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Tangibles Tangibles Tangibles Tangibles Tangibles Tangibles
Tangibles
Reliability Reliability Reliability Reliability Reliability
Reliability
Responsiveness Responsiveness Responsiveness

Responsiveness
Assurance Assurance Assurance Assurance
Empathy Empathy Empathy Empathy
Specific
content
National
culture
Storage
capability
Usability Information
content
Information Fulfilment Basic factor Speed Customer
confidence
Content
quality
Serviceability Functionality Compensation Performance
factor
Online
resources
Technical
adequacy
Security and
system integrity

Efficiency Contact Exciting
factor
Trust
Customisation
Web store
policies
Reputation
20
Table 2: Number of respondents by gender
EUR NEU Total
Male 194 104 298
Female 52 188 240
Total 246 292 538
21
Table 3: Number of respondents by age

EUR NEU Total
<21 yrs 81 192 273
21-25 yrs 143 71 214
26-30 yrs 10 19 29
31-35 yrs 8 4 12
>35 yrs 4 7 11
Total 246 293 539
22
Table 4: Satisfaction of respondents with the equipment they
use
EUR NEU Total t-test sign.
Satisfaction with:
PC 3.85 3.83 3.84 n.s.
Connection speed 3.30 3.59 3.46 .01
Printing from the web 3.31 3.53 3.43 .03
Downloading from the web 3.68 3.57 3.62 n.s.
* on a five point scale from very dissatisfied to very satisfied;
** significance level t-test (2-tailed) for inequality of means of
EUR and NEU; n.s. = not significant (sign. >.05).
23

Table 5: The use of the web
EUR NEU Total t-test sign.
Easy to find desired web site 3.54 3.80 3.68 .00
Easy to use web page links 3.99 3.92 3.95 n.s.
Easy to find relevant information 3.07 3.38 3.24 .00
Time spend on one site ~ 9 min. ~12 min. ~10 min. .00
Time on the web per Internet visit ~ 50 min. ~ 60 min. ~ 55
min. .03
Number of Internet visits per week ~14 visits ~19 visits ~16
visits .00
* if not indicated otherwise, on a five point scale from very
difficult to very easy; ** significance level t-test (2-tailed) for
inequality of means of EUR and NEU; n.s. = not significant
(sign. >.05).
24
Table 6: Websites ranked by overall frequency of visits
EUR NEU Total t-test
Mean Mean Mean SD sign
Search engines 4.32 4.64 4,49 0,86 .00
Universities 4.00 3.38 3,66 1,18 .00
Daily newspapers 3.30 3.63 3,48 1,30 .00
Entertainment 3.34 3.47 3,41 1,16 n.s.
Information portals 3.29 2.92 3,09 1,31 .00
Personal web sites 3.17 2.99 3,07 1,32 n.s.
Electronic libraries 2.94 3.02 2,98 1,14 n.s.
Company information 3.16 2.58 2,85 1,17 .00

Banking 2.87 2.60 2,73 1,36 .02
Games 2.55 2.82 2,70 1,30 .02
Sports 2.69 2.62 2,65 1,40 n.s.
Travel 2.41 2.72 2,58 0,98 .00
E-shops 2.34 2.57 2,47 1,13 .02
Book stores 2.18 2.41 2,31 0,98 .01
Stock exchange information 2.60 2.02 2,29 1,38 .00
Music stores 1.96 2.39 2,19 1,04 .00
Movies stores 1.72 2.27 2,02 1,05 .00
Second-hand products 1.78 2.16 1,99 1,07 .00
Chat rooms 2.00 1.76 1,87 1,20 .02
Who is where 1.86 1.84 1,85 1,13 n.s.
* on a five point scale from never to once a day or more; **
significance level t-test (2-tailed) for
inequality of means of EUR and NEU; n.s. = not significant
(sign. >.05).
25
quality
top ten with highest scores on Importance: Importance
Satisfaction Delta
Mean Mean S-I
Access is fast 4,59 3,13 -1,46
Finding your way on the web site is easy 4,56 3,25 -1,32
A complete overview of the order is presented before final
purchase decision 4,48 3,66 -0,82
The registration process is simple 4,37 3,28 -1,08

Tax and/or other charges are clearly detailed 4,37 3,23 -1,14
All relevant order confirmation details are sent by email within
24 hours 4,36 3,60 -0,77
24 x 7 x 365 user accessibility 4,35 3,64 -0,71
There are well programmed search options 4,34 3,07 -1,27
Access to anticipated delivery times is available at all times
4,31 3,08 -1,23
Order cancellation and returns details are confirmed within
three days 4,30 3,07 -1,23
* mean values on five point scales
26
quality
bottom ten with lowest scores on Importance: Importance
Satisfaction Delta
Mean Mean S-I
On travel sites a flight/hotel search is provided 3,75 3,30 -0,45
The security policy is accessible 3,72 3,29 -0,44
On travel sites the user can customise seat and meal preferences
and the
information is retained
3,71 3,17 -0,54
The web site contains company details 3,68 3,27 -0,41
Links are provided to pages on related products and services.
3,61 3,28 -0,33

Scrolling through pages and text is kept to a minimum 3,58 3,30
-0,28
Web site animations are meaningful 3,38 3,03 -0,36
A customer platform is provided for exchange of ideas 3,24 3,16
-0,08
Brand image is important 3,24 3,28 0,04
The user is invited into a frequent buyer program. 3,11 3,05 -
0,06
* mean values on five point scales
27
Table 9: Confirmative factor analysis (5 factor solution)
IMPORTANCE SATISFACTION
Factor 1 (Reliability):
• A complete overview of the order is presented before
final purchase decision
• Tax and/or other charges are clearly detailed
• Different payment options are stated clearly
• All relevant order confirmation details is sent by email
within 24 hours
• Access to anticipated delivery times is available at all
times
• Terms and conditions of sales are accessible
• Order tracking details are available until delivery
• Order cancellation and returns details are confirmed

within three days
• Full details of product or service pricing are available
• The registration process is simple
• Full product or service characteristics are available
Factor 1 (Reliability):
• All relevant order confirmation details is sent by email
within 24 hours
• A complete overview of the order is presented before
final purchase decision
• Terms and conditions of sales are accessible
• Order tracking details are available until delivery
• Different payment options are stated clearly
• Tax and/or other charges are clearly detailed
• Access to anticipated delivery times is available at all
times
• Order cancellation and returns details are confirmed
within three days
Factor 2 (Tangibles):
• Finding your way on the web site is easy
• Information is found with a minimum of clicks
• Navigation is consistent and standardised
• There are well programmed search options
• Instructions are directly available
Factor 2 (Tangibles):
• Finding your way on the web site is easy
• Information is found with a minimum of clicks
• Navigation is consistent and standardised
• The number and type of links are meaningful

• The purpose is clear
• Scrolling through pages and text is kept to a minimum
• Instructions are directly available
• Graphics and animations do not detract from use
• A standard navigation bar, a home button and
back/forward button are available on every page
Factor 3 (Empathy):
• Links are provided to pages on related products and
services.
• On travel sites the user can customise seat and meal
preferences and the information is retained
• On travel sites a flight/hotel search is provided
• A customer platform is provided for exchange of ideas
• The user is invited into a frequent buyer program.
Factor 3 (Empathy):
• Links are provided to pages on related products and
services.
• A customer platform is provided for exchange of ideas
• On travel sites the user can customise seat and meal
preferences and the information is retained
• On travel sites a flight/hotel search is provided
• Web sites that focus on brand awareness have a store
locator
Factor 4 (Assurance):
• The security policy is accessible
• The privacy policy is accessible
• External validation of trustworthness is important
• The web site contains company details

Factor 4 (Assurance):
• The privacy policy is accessible
• The security policy is accessible
• The web site contains company details
• External validation of trustworthness is important
Factor 5 (Responsiveness):
• The frequently asked questions and answers contain links
that take the user to the relevant page(s)
• Information is provided to frequently asked questions
and answers
• Queries or complaints are resolved within 24 hours
• User feedback is sought to measure customer satisfaction
• An email address for queries and complaints is provided
Factor 5 (Responsiveness):
• User feedback is sought to measure customer satisfaction
• Queries or complaints are resolved within 24 hours
• The frequently asked questions and answers contain links
that take the user to the relevant page(s)
• Required stock information is available throughout the
buying process
* Principal Component Analysis. Varimax with Kaiser
Normalization.; ** Rotation converged in 9 iterations
(Importance) and
10 iterations (Satisfaction).; *** Factor loadings >.5; ranking
based on factor loadings from high to low

Customer Service Metrics That Matter
Klie, Leonard. Speech Technology17.6 (Nov/Dec 2012): 22-25.
Turn on hit highlighting for speaking browsers by selecting the
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Abstract (summary)
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Abstract
Customer experience as a competitive differentiator is a goal for
many businesses, but many find it's easier said than done. In
their attempts to determine the success -- and ultimate value --
of their contact centers, companies have traditionally looked at
customer service purely from a financial vantage point. The
basic concept of contact center management was how fast you
could answer the call and get the customer off the phone. That
was the driving key performance indicator, says Maggie Klenke,
founding partner of the Call Center School in Lebanon, TN.
Metrics like these ate out of step with the current prevailing
business shift from a business-centric approach toward a
customer-centric one, from one-size-fits-all experiences to
hyper-contextualized experiences that focus on giving
customers what they want, when and how they want it.
Regardless of what metrics a company uses and who conducts
the research, experts warn against placing too much stock in a
single metric.
Full Text
· Translate Full text
Headnote

One-third of companies are missing the mark. Don 't Let yours
be one of them.
Customer experience as a competitive differentiator is a goal for
many businesses, but many find it's easier said than done.
As proof of this, more than two thirds of business leaders
recently surveyed by Forrester Research stated that their firms
have set this as a goal, but more than half lack a definitive
strategy to do so.
That's because when it comes to improving customer service
operations, many companies lack the right information.
In their attempts to determine the success - and ultimate value -
of their contact centers, companies have traditionally looked at
customer service purely from a financial vantage point They
have applied business-centered goals, like cutting costs, making
money, and beating the competition, to their contact centers,
and used indirect metrics, such as automation and containment
rates, script adherence, and average handling times, as the
guiding principles by which these contact centers were
measured.
"The basic concept of contact center management was how fast
you could answer the call and get the customer off the phone.
That was the driving [key performance indicator]," says Maggie
Klenke, founding partner of the Call Center School in Lebanon,
Tenn.
Metrics like these are out of step with the current prevailing
business shift from a business-centric approach toward a
customer-centric one, from onesize-fits-all experiences to
hyper-contextualized experiences that focus on giving
customers what they want, when and how they want it.
In light of these changes, contact center leaders should
determine whether or not traditional customer service metrics
still serve them well today.
"Sure, there's a bottom line that you have to manage to, but that
can't be the only thing," says Peggy Carlaw, vice president of
Impact Learning Systems, a customer service training and
consulting firm in San Luis Obispo, Calif. "Leadership today

has to say that customer satisfaction is important and find a
happy medium between customer satisfaction and cost."
Bruce Belfiore, CEO of BenchmarkPortal, a contact center
research and consulting firm in Santa Barbara, Calif., agrees.
"A great contact center operation reflects its management's
passion for balancing the demands of high quality and low
costs," he says.
To do this effectively requires measuring and benchmarking,
something Belfiore says can deliver "a crackerjack profile of a
contact center's operations that can inspire management to move
forward aggressively."
While more organizations are focusing on measuring customer
experiences, there's still room for improvement A third of the
companies in the Forrester survey don't evaluate the
relationship between experience quality and business outcomes,
use job-specific customer experience metrics to evaluate
employee performance, or share customer experience metrics
and models with employees. This "makes it harder for even
weU-meaning employees to tell if they're doing the right thing,"
Forrester analysts concluded in their "State of Customer
Experience 2012" report.
The Complete Picture
As more organizations improve their quality of interactions,
task completion rate is emerging as the most meaningful
guidepost for contact center performance. This metric looks at
the number of callers who were able to accomplish their goals
through the interaction.
According to Carlaw, task completion is "the number-one driver
of customer satisfaction" today.
Task completion also has a direct correlation with another
important metric - abandon rate, which is closely tied to how
quickly calls are answered: The longer it takes to answer a call,
the higher the abandon rate, which could then inflate future call
volumes, resulting in even higher abandon rates, and so on.
In cases when automation is involved, high abandon rates can
point to problems with the interactive voice response (IVR)

system. It could mean that the prompts and responses the system
generated weren't helpful or appropriate. Or even worse,
perhaps the system failed to hear and understand what the caller
said, thereby routing the call down the wrong path.
But regardless of whether an agent or IVR picks up the call,
measuring abandon rates is an inexact science because many
other factors could influence the caller's decision to hang up
before completing his task. A caller's tolerance can easily be
influenced by his patience and degree of motivation (the
importance of the call and the issue that needs to be discussed);
the availability of other self-help options, such as an FAQ
section on the company Web site; the amount of time he has
available; and whether he is paying for the call. His past history
with the contact center - whether he has to wait a long time
whenever he calls or if he got right through the last time he
called - is also a determining factor.
Finishing First
That's why when evaluating task completion and abandon rates,
companies also need to look at how tasks are completed. Are
most issues being resolved entirely through self-service, with
one agent, or with several agents and their supervisors?
First contact resolution measures how often customer issues are
resolved on the first try. It is the driver for excellence in any
customer service organization and has a powerful and positive
ripple effect on all other performance and financial metrics.
"It's simple: Customers want to call, not wait too long, get
someone on the phone who can help, and get done with the
business at hand," Carlaw says. "And they want the first-line
reps to be able to handle their issues without having to refer to
their supervisors."
Not surprisingly, customer loyalty and satisfaction drops
significantly after having to place a second call for help - and
just about disappears after the third call, according to a
consumer survey conducted by Customer Care Measurement and
Consulting, an Alexandria, Va., firm, and Arizona State
University's Carey School of Business. Frustrated consumers

are those who have to contact companies an average of 4.4
times to get their issues resolved, the study finds.
Experts agree that first contact resolution is one of the most
teUing metrics available, but that it can also be difficult to
quantify. An agent is unlikely to know that a caller had already
visited the company's Web site for information, or that the
caller had sent an email to the company about the same problem
two weeks ago. But that doesn't have to be the case.
"Sophisticated CRM systems can unlock this information," says
David Raia, senior research analyst at BenchmarkPortal.
Tammy Cossairt, vice president of client strategy at Telerx, a
contact center outsourcing firm serving clients in the
pharmaceutical and consumer packaged goods industries, says
low-tech methods, such as an agent specifically asking a caller
if she's contacted the company before about the issue, can be
used as well.
Keep It Simple
This feeds into another emerging metric - customer effort. The
Customer Effort Score, developed by the Corporate Executive
Board's Customer Contact Council, tracks the amount of time
and effort that customers have to put into solving their post-
sales problems. This includes cognitive, emotional, physical,
and time elements, and presumes that the more effort a customer
has to expend in each of these areas, the less satisfied he will be
with the interaction.
'If you can take care of their call without them having to jump
through hoops, customers will be really satisfied," Raia says.
Customer effort can be negatively affected by many events and
activities, including dealing with an LVR that offers lots of
menus and choices, completing a complex process to verify an
identity, being asked to repeat information within the call, or
talking with agents who use a lot of jargon that then needs to be
translated. Customer effort scores also look at whether a
company provides accurate information about its products,
services, and policies, and makes sure all the necessary
information is readily available across all channels.

A Matter of Time
Customer effort is also tied to some of the other more common
metrics, such as average handle time, waiting time, and the
amount of time a caller is placed on hold by the agent. Average
handle time takes into consideration the total amount of time
the customer spends on the phone, from start to finish, and is a
useful indicator of overall contact center efficiency. It often
correlates highly with customer satisfaction.
Agent-generated hold looks at the percentage of the total call
volume in which agents put customers on hold and the number
of times and the length of time the customer spends on hold. For
the customer, a few minutes on hold can seem a lot longer.
"If you keep a customer on hold for two minutes and everyone
[at the company] keeps him on hold for thirty seconds, you have
real problems," Raia notes.
But the length of time on the phone by itself can be deceiving in
some respects, according to Carlaw. "Look at the talk times and
how much it can cost, and then compare that to the revenue
generated," she says. "An agent could have been on the phone
for four minutes longer, but she [could have] made so much
more in extra sales."
Still another widely popular metric is Satmetrix's Net Promoter
Score, which suggests how likely customers are to recommend a
company to others. It asks just one question: "How likely is it
that you would recommend our company to a friend or
colleague?" The customer can respond with a rating on a scale
of 1 to 10. Those ratings are then divided into three groups:
Promoters (rating of 9 or 10), Passives (7 or 8), and Detractors
(0 to 6). The percentage of detractor responses is subtracted
from the percentage of promoters to give a Net Promoter Score.
That metric is reportedly used by about 69 percent of companies
today.
And finally, a good way to anticipate how satisfied the caller
will be is to gauge the job satisfaction of the agents. Customer
satisfaction is inversely proportional to agent dissatisfaction,
according to Raia.

"If agents are happy to come to work each day, they are likely
to do a better job of treating your customers [well]," Carlaw
adds. In other words, happy agents are more likely to equal
happy customers.
This has far-reaching implications weU after the phone call
ends. Research from Gartner reveals that customers who felt
pleased, appreciated, important, or special during an interaction
with a business were likely to recommend the company to
friends and relatives 31.7 percent of the time, and to purchase
more products or services from that company 19.1 percent of
the time. Conversely, those who felt let down, frustrated, angry,
ignored, or confused were likely to complain about the company
to friends and relatives 25.6 percent of the time, switch to
another company 20.1 percent of the time, and scale back their
purchases from the company 9.5 percent of the time.
The Methodology
Across the industry, there is some disagreement as to the best
time to conduct surveys to gauge a customer's satisfaction with
a recent service interaction. One school of thought suggests that
it's best to present a survey option to customers right at the end
of calls to capture their immediate impressions. This also
enables the company to quickly respond to customer complaints
or problems. Plus, it's easier for organizations to coach agents
"when the caU is still fresh in their minds," Cossairt adds.
Other experts suggest surveying customers days or even
weeks after the interaction, giving callers sufficient time to see
if &-^ their issues were truly resolved. That information might
not be available until they receive their next month's bill, for
example.
Waiting that long, though, can defeat the purpose of the survey.
According to Rlenke, if too much time elapses between the
initial call and the survey, details about which agent handled the
call and what was said can be lost.
"You need to get calls that have closed within the past two
weeks," Raia believes. "If you go beyond that, the caller will
have forgotten what happened. The closer you get to the actual

phone call, the more accurate your information will be."
Discrepancies also exist regarding the survey methods. Some
say surveys should be voice-based so they can capture
comments verbatim, as weU as the emotions that go with them.
Others say an email survey is just as effective and far cheaper
to conduct.
But what is not disputed is the need to always give the customer
the option to participate in the survey. And then, to keep the
survey simple. Klenke suggests three basic questions: Was the
agent helpful? Were you satisfied with the interaction? Would
you recommend us to a friend?
After that, be prepared to apply a filter to the results. "You will
get very polarized views from people who were either very
satisfied or very dissatisfied and not much from people who
were in the middle," Klenke explains.
And while some companies rely on third parties to conduct
customer satisfaction surveys, they might not always be
necessary. "It depends on how you're using the results," Carlaw
states. "If you're using [the data] to promote to customers how
great your customer service is, having a third party do [the
survey] can validate your claims."
Regardless of what metrics a company uses and who conducts
the research, experts warn against placing too much stock in a
single metric. After all, you wouldn't expect to take a top
archery prize if you showed up with just one arrow.
Sidebar
"Leadership today has to. ..find a happy medium between
customer satisfaction and cost."
Sidebar
A good way to anticipate how satisfied the caller will be is to
gauge the job satisfaction of the agents.
AuthorAffiliation
News Editor Leonard Klie can be reached at [email protected]
Word count: 2260
Copyright Information Today, Inc. Nov/Dec 2012

Indexing (details)
Cite
Subject
Customer satisfaction;
Call centers;
Competitive advantage;
Business metrics;
Customer services
Location
United States--US
Classification
9190: United States
2400: Public relations
2310: Planning
Title
Customer Service Metrics That Matter
Author
Klie, Leonard
Publication title
Speech Technology
Volume
17
Issue
6
Pages
22-25
Number of pages
4
Publication year
2012
Publication date

Nov/Dec 2012
Publisher
Information Today, Inc.
Place of publication
Medford
Country of publication
United States
Publication subject
Communications
ISSN
10885803
Source type
Trade Journals
Language of publication
English
Document type
Feature
Document feature
Illustrations
ProQuest document ID
1220477009
Document URL
http://search.proquest.com.ezproxy.trident.edu:2048/docview/12
20477009?accountid=28844
Copyright
Copyright Information Today, Inc. Nov/Dec 2012
Last updated
2013-06-27
Database
ProQuest Central
The Supreme Court's jurisprudence of P. R. 2003

2003 DTS 121 LAS Marías REFRENCE LAB V.
MUNICIPALITY OF SAN JUAN 2003TSPR121
IN THE SUPREME COURT OF PUERTO RICO
Las Marías Reference Laboratory Corp.
Demandante-Recurrido
V.
Municipality of San Juan
Demandado-Peticionario
Certiorari
TSPR 2003 121
DPR 159 ____
Case Number: DC-2002-725
Date: July 15 2003
Circuit Court of Appeals: Regional Circuit I
Judge Rapporteur: Hon. Dolores Rodriguez of
Oronoz
Lawyers from the petitioner: Lcdo. Ivan Castro Ortiz
Lcdo. Simone Cataldi Malpica
Counsel for the defendant: Lcdo. Orlando Fernandez
Subject: collection of money, contract. Municipality not liable
for the debt. The non-referral of a municipal contract to the
Office of the Comptroller, as required by the Autonomous
unenforceable. Court orders that all municipalities regulate on
this area to comply with this requirement for bill and
recommends to the private parties to enforce this requirement of
law before making any delivery.
WARNING

community.
Court Opinion issued by the Judge associated JEHOVAH
CORRADA DEL RIO
San Juan, Puerto Rico on July 15 2003.
We must resolve if the non-referral of a municipal contract
to the Office of the Comptroller, as required by the Autonomous
unenforceable.
By understanding that compliance with this requirement is a
constitutive element of all municipal contract, resolve in the
affirmative.
I
Las Marías Reference Laboratory Corp. (Hereinafter, "Las
Marias") has filed a lawsuit in recovery of money against the
Municipality of San Juan (hereinafter, "the Village") by the
amount of $510,659.80 . [ 1] By the claim, the Marys argued
that the aforementioned debt arose from a contract it had signed
with the Municipality, in which this would provide clinical
laboratory services to indigent residents of San Juan. [ 2] The
alleged services were provided for various periods between the
1 of August 1994 and 30 June
1997. [endnoteRef:1][endnoteRef:2] [1: Footnotes
[ 1] The demand was presented on 28 August 1997.
See Appendix, p. 1.
] [2: [ 2] The services were provided to the patients of
programs such as "San Juan AIDS" and "Mental Health", as well
as other attached to the Department of Health of the Capital.
See petition for certiorari , p. 3.
]

Subsequently, the parties presented before the Court of First
Instance, Upper Chamber of San Juan (hereinafter, "TPI") a
stipulation of partial Judgment, through which they agreed that
the municipality would satisfy the amount of $244,544.50 in
partial payment of the amount owed. [ 3] As a result, the TPI
proceeded to sentencing by the partial amount stipulated, and
ordered the continuation of the procedures in relation to the
balance of the amount claimed.[endnoteRef:3] [3: [ 3] The
stipulation was submitted on 29 August 1997. See Appendix, p.
716.
]
After that event, the Municipality submitted its reply to the
demand. [ 4] In essence, claimed that the contracts signed
originally by the parties are not in dispute. However, seeks to
pay debts resulting from services that, defeated the original
settlements, the parties agreed to through a series of
letters.[endnoteRef:4] [4: [ 4] The answer was submitted on 3
November 1997. See Appendix, p. 5.]
As things stand, the Marys filed a motion for summary
judgment by reiterating the allegations outlined in its demand.
In support of such a request, was accompanied by a sworn
statement and other documents certifying a municipality's debt
up to $165,679.61 . In addition, included an account of the facts
that he understood they were not in dispute.
In disagreement, the Municipality submitted a motion in
opposition to the request for summary judgment, and requested
that could be resolved in your favor. To these effects, submitted
a audit report prepared by the signature Figueras & The Valley,
[ 5] which raises it does not come from the payment of the
invoices claimed in those cases where the extension or renewal
is made through letters that were not recorded in the Office of
the Comptroller, contrary to the provisions of the Law of
Autonomous Municipalities, 21 L. P. R. A. §
4001 [endnoteRef:5]et seq. In accordance with this report, the

Municipality claimed that the amount of the invoices that come
from legitimate be paid, be supported properly by written
contract and registered with the Office of the Comptroller, in
the amount of $42,755.80 . [5: [ 5] The study carried out by the
aforementioned signature was endorsed by the Las Marias.
See plea of the defendant, p. 2. In the same, Figueras & The
Valley study all of the invoices sent by the Marys to the
municipality, as well as the contracts, their records to the Office
of the Comptroller and documents related to the procurement
process from the auction of the service of laboratory testing for
several health facilities of the Municipality. See petition for
certiorari , p. 4.]
After several procedural steps, the CFI issued a ruling in favor
of the Marias the January 17, 2001 which was notified on
January 31 of that year. Using the same, said forum concluded
that the contracts, amendments and extensions existing between
the parties were valid contracts and in accordance with the law,
public order and morality. Furthermore, it argued that the fact
that the City violated its obligation to provide a copy of some of
the contracts to the Controller's Office, not invalidated for
annulment the agreements signed.
The Municipality appealed this decision to the Circuit Court of
Appeals (hereinafter, "ED" ). By judgment of 23 May 2003, [
6] the TCA ruled that there was no dispute about the validity of
contracts, and that could not be penalizing the Marys by the
omission of the Municipality in submission to the Office of the
Comptroller.[endnoteRef:6] [6: [ 6] The judgment was notified
on 5 June 2002. See Appendix, p. 673.]
Dissatisfied, the Municipality submitted a writ of certiorari in
this Court, in which she raised that:
[E]RRO the Honorable Circuit Court of Appeals to confirm the
judgment of the Court of First Instance ordered the payment of
invoices submitted by the defendant, even without a written
contract and registered with the Office of the Comptroller.

The Seaworthy resource through Resolution of November 1
2002. Perfected the same resolve.
II
The Art. 1 Of Act No. 18 October 30 1975, 2 L. P. R. A. § 97,
provides that:
[L]os departments, agencies, instrumentalities, offices and
any other organism and the municipalities of the Estado Libre
Asociado de Puerto Rico, without exception, shall keep a record
of all the contracts that accord, including amendments thereto,
and shall send a copy to the Office of the Comptroller within
fifteen (15) days following the date the awarding of the contract
or amendment. (Emphasis supplied).
For its part, the Art. Law 8,004 of Autonomous Municipalities
of Puerto Rico, 21 L. P. R. A. § slow 4354 expressed in the
relevant:
... .
[N]or shall authorize any disbursement related to contracts
without the record of having sent the contract to the Office of
the Comptroller of Puerto Rico, in accordance with the
provisions of the secs. 97 ET seq. of Title 2 and its regulation.
A comprehensive reading of the two provisions of law leads us
inexorably to the conclusion that no municipality will be able to
meet any debt that emanates from an agreement that has not
been registered and forwarded to the Office of the Comptroller.
[ 7] In fact, to interpret these provisions previously, we
mentioned that the same "reflect the legislative intent to create
a comparison mechanism [endnoteRef:7]and publicity of
contracts awarded by the municipalities, [ 8] [endnoteRef:8]that
is constitutive in nature with respect to the effectiveness of
these." Fernandez & Gutierrez v. Municipality of San Juan, 147
D. P. R. 824, 830 (1999) (emphasis supplied). Therefore, the
unenforceability of municipal contracts not forwarded to the
controller responds to the fact that they are not legally

considered sophisticated. That is to say, any covenant between a
private party and a municipality in which does not follow the
procedure stipulated by law is null. Hatton v. Municipality of
Ponce, 134 D. P. R. 1001, 1007 (1994). This postulate operates
regardless of whether the contract in question is a original
agreement, or an extension or renewal. See Fernandez &
Gutierrez v. Municipality of San Juan, supra , p. 832. [7: [
7] We have also established that for what was agreed to between
the private party and the municipality will be binding, it has
agreed to be formulated in writing, without exception.
Fernandez & Gutierrez v. Municipality of San Juan, 147 D. P.
R. 824 (1999); Hatton v. Municipality of Ponce, 134 D. P. R.
1001 (1994).
] [8: [ 8] The registration requirements and referral of the
contracts to the Office of the Comptroller are aimed at
preventing the payments and the fraudulent claims or illegal,
through the creation of a comparison mechanism that preserves
chronologically the circumstances of these agreements.
Hatton v. Municipality of Ponce, supra , p. 1006.]
The stringency of these precepts responds to the great interest
of the State in promoting a healthy and straight public
administration, preventing the waste, corruption and cronyism
in government contracting. Id.,at p. 829; Hatton v.
Municipality of Ponce, supra , 1006; Ocasio v. Mayor
of Maunabo, 121 D. P. R 37, 54 (1988); Morales v. Municipality
of Toa Baja, 119 D. P. R. 682, 693 (1987). To these effects, we
have expressed that "good administration of a government is a
virtue of democracy, and part of its good administration
involves carrying out its functions as a buyer with efficiency,
honesty and correction to protect the interests and money of the
people to which the government represents." Fernandez &
Gutierrez v. Municipality of San Juan, supra , p. 829; Mar Co. ,
Inc. , v. General Services Administration, 126 D. P. R. 864, 871
(1990).
In addition, we have clearly established that these rules are

there to "protect the public interest and not to the contracting
parties." Hatton v. Municipality of Ponce, supra , p. 1011
(emphasis supplied). In accordance with this principle, has
been implemented this regulation of inflexible way, be
presumed that the parties contracting with a municipality are
aware of the need to conduct themselves in accordance with
these specifications. Id As a result, we have determined the
inapplicability of any remedy in equity, as for example, unjust
enrichment, in favor of any private party who contracts with a
municipality and damage by not adhering to the established
rules. See Fernandez & Gutierrez v. Municipality of San Juan,
supra , p. 833; Hatton v. Municipality of Ponce, supra , p. 1010-
1012. So any time that is doctrine reiterated that such remedies
shall not apply when it is contrary to a clear public policy
embodied in a statute or the Constitution. See Hatton v.
Municipality of Ponce, supra, p. 1010; Morales v. Municipality
of Toa Baja, supra , pp. 684-685. [ 9][endnoteRef:9] [9: [ 9] to
establish this criterion, we express in Hatton, supra , page 1012,
that "we refuse to raise a range of judicial precedent acts
carried out against laws that embody fundamental principles of
healthy public policy and administration of public funds. In the
strongest terms we reject this claim" (emphasis in original).
]
Finally, we have emphasized that the faithful compliance with
the aforementioned formal requirements still apply when there
is a "real state of emergency," duly proclaimed by the Mayor or
the Governor of Puerto Rico. See Hatton v. Municipality of
Ponce, supra , pp. 1005-1009. [ 10] The purpose is to "prevent
the states of emergency - either real or fictitious are poorly used
by municipal officials and third persons." [endnoteRef:10]Id.,at
p. 1008. We reiterate that reasoning in Fernandez & Gutierrez v.
Municipality of San Juan, supra , pp. 829-831, where we
explained that the formal requirements of municipal contracts
cannot be ruled out "even in cases of emergency", since they are
essential "to prevent the waste, corruption and cronyism" in a

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