The City of Vaughan (City) wanted a building project for a new community center completed. It called for bids from interested construction companies. The call for bids carried certain stipulations: (i) it required bids to be accompanied by a $500 000 "deposit" cheque, (ii) it said that all bids were irrevocable after the close of tenders - ie after the deadline for receiving bids, (iii) it said that a "deposit" cheque would be forfeited if a bidder withdrew their bid within 60 days after the close of tenders, and (iv) it said that the successful bidder would be required to create a contract for the actual construction project within 7 days of being notified that it submitted the winning bid.

Rosa Construction, the plaintiff, submitted a bid and a deposit cheque for $500 000. A short time later, after bids had closed, it realized that it had made a mistake when it calculated the expected costs of completing the construction project. As a result, its bid was substantially lower than it should have been. The CEO of Rosa Construction called the City Manager indicating that it could not accept their bid. The CEO was careful not to withdrawn their bid. The City Manager refused to disregard the bid and, in fact, later announced that the plaintiff had submitted the winning bid. When the plaintiff refused to create a contract for the building project within 7 days, the defendant relied on the terms of the call for bids and refused to return the plaintiff's cheque for $500 000.

Is the plaintiff company bound by the stipulations and rules that the City set out in its call for bids or tenders. Is the defendant entitled to keep the cheque if the City refused to create a contract? Explain your answer.