mouser
Business of Hockey
I think the drugs themselves and the border incident itself have little to nothing to do with the contract termination. I think the termination has everything to do with the fact that neither Richards nor his Agent told the Kings that this incident happened for two weeks. There are 14-15 million reasons why team Richards would want to keep that quiet until after July 1st, and this all gets to the section of the CBA that the Kings (and the NHL) noted in their brief that they disclosed to the media:
"In a brief filed to the NHL and the NHLPA, the team referenced Section 2(e) of the SPC, which states a player agrees "to conduct himself on and off the rink according to the highest standards of honesty, morality, fair play and sportsmanship, and to refrain from conduct detrimental to the best interest of the Club, the League or professional hockey generally."
Not disclosing a border incident so as to not jeopardize your big payday on July 1st, which also has the effect of the Kings making significant player and personnel transactions they would have otherwise not made, is probably the reason the Kings and the NHL felt this was a contract-cancelling incident. Not the drugs, or the investigation itself - as others have said, if team Richards had notified Dean & Co. immediately, there probably isn't a breach of contract here.
I'm curious why Richards would be contractually obligated to report what happened to the Kings? And on what timetable he would be obligated to report it? It seems like a legal stretch to use "we could have traded him if he didn't get into trouble" as the basis for a material breach of contract.