Residents encounter real legal and financial exposure well before they sign their first attending contract — a term sheet during job searching, a moonlighting agreement mid-residency, a malpractice coverage question before an away rotation. None of this requires a law degree to navigate safely. It does require knowing what these documents actually are, what to look for, and when the smart move is simply “have someone else read this before I sign.”

This is educational information, not legal advice — for anything with real money or real liability attached, a quick review by an actual attorney (or your program’s GME office, for training-related questions) is worth the cost relative to what a bad contract can cost you.

Term sheets: what they actually commit you to

A term sheet (sometimes called a letter of intent or offer summary) typically isn’t a fully binding employment contract — it’s a summary of proposed terms meant to establish alignment before the full contract gets drafted. But “not fully binding” doesn’t mean “meaningless,” and residents new to this process often swing too far in either direction — either treating it as ironclad or assuming it carries no weight at all.

A few things worth understanding:

• Certain clauses within a term sheet can be binding even if the overall document isn’t a full contract — confidentiality provisions and exclusivity/no-shop clauses (agreeing not to negotiate with other employers for a period) are common examples. Read the specific language rather than assuming the whole document is casual because it’s labeled “term sheet.”
• Signing a term sheet does create real professional and reputational stakes, even where it’s not fully legally binding. Backing out after signing one, especially late in a process, can damage your standing with that employer and, in smaller specialty communities, potentially your reputation more broadly.
• The full contract can and often does differ from the term sheet in meaningful ways. Treat the term sheet as a serious starting point for negotiation, not a guarantee of final terms — and read the full contract just as carefully as if the term sheet had never existed.

Moonlighting and independent contractor agreement red flags

Moonlighting agreements — especially independent contractor arrangements outside your home institution — carry real, resident-specific risks that a standard employment contract doesn’t. Watch specifically for:

• Vague or absent malpractice coverage language. The agreement should state explicitly who provides your malpractice coverage for that specific work, at what limits, and whether it’s occurrence-based or claims-made (the distinction matters — see below). “Coverage will be provided” without specifics is a red flag worth pushing back on before you work a single shift.
• Scope-of-practice mismatches. Some moonlighting arrangements ask residents to evaluate patient populations or handle case types outside their current training level or comfort — pediatric evaluations for a resident without pediatric training, for instance. If the scope described doesn’t match your actual competency and supervision level, that’s a direct patient-safety and personal-liability issue, not just a contract nuance.
• Exploitative pay structures. Watch for per-unit or productivity-based pay that sounds high per case but translates to a low effective hourly rate once realistic volume is factored in, or contracts that don’t clearly specify whether you’re paid for administrative and documentation time in addition to clinical time.
• Independent contractor classification itself. Being classified as a 1099 independent contractor rather than a W-2 employee changes your tax treatment (you’ll owe self-employment tax and need to plan for quarterly estimated payments) and generally means you’re not covered by an employer’s malpractice policy by default — confirm your coverage source explicitly rather than assuming it’s handled.
• No clear volume or scheduling commitment in either direction. Agreements that don’t specify minimum or maximum shift volume can leave you either overcommitted or without the income you were counting on — get concrete numbers in writing.

If a moonlighting contract is vague on any of these points, that vagueness is the answer to whether you should sign it as-is. Ask for the specific language before you start, not after something goes wrong.

Malpractice coverage for away rotations and electives

This is one of the more commonly overlooked gaps residents run into, particularly for away electives or rotations outside their home institution’s system:

• Your home program’s malpractice coverage does not automatically extend to every setting you rotate through. Confirm specifically, in writing, whether your coverage follows you to the away site or whether the host institution is expected to provide it — don’t assume either direction without confirming.
• Understand the difference between occurrence and claims-made coverage. Occurrence coverage protects you for any incident that happened during the policy period, regardless of when a claim is later filed. Claims-made coverage only protects you if the claim is filed while the policy is active (or during an extended reporting period) — which matters enormously if a claim surfaces after you’ve moved to a new program or institution and your coverage has lapsed.
• Ask specifically about coverage limits, not just whether coverage exists. Limits are usually expressed as a per-occurrence amount and an aggregate annual amount (e.g., $1M/$3M) — know what these numbers mean for the specific setting and patient population you’ll be working with, and don’t assume a “standard” limit is automatically adequate for every practice environment.
• If coverage genuinely isn’t provided or is unclear, look into short-term supplemental coverage before the rotation starts, not after you’re already there. Waiting until you’re mid-rotation to sort this out leaves you working without a clear answer to a question that matters.

The through-line: ask for specifics, in writing, before you commit

Every category above shares the same underlying protection: vague language is the risk, and specific written answers are the fix. “Coverage is provided,” “compensation is competitive,” and “expectations will be discussed” are all phrases worth pushing back on directly — ask for the actual number, the actual policy type, the actual scope, before you sign or before you start. Programs, employers, and moonlighting sites that are operating in good faith will generally answer these questions readily. Reluctance to specify is itself useful information.

None of this requires becoming your own lawyer. It requires knowing which specific questions to ask, asking them before you’re financially or legally exposed, and treating “I’d like this reviewed before I sign” as a completely normal, expected step — not something that makes you look difficult. The residents who avoid the worst outcomes here aren’t the ones who never encounter a bad contract. They’re the ones who caught the vague language before they signed it.