(The Birmingham Post Via Thomson Dialog NewsEdge) Midilink West Midlands has great hopes to build up the overseas buyers of medical equipment - and Iran is one of the potential customers, judging by the interest shown here.

Cathy McMain, sales manager with GVR Products, Stoke on Trent, is showing Dr Seyed Hassan Tabatabael, managing director of Teharan-based IMAFAR an sinus endo-scope. And in the foreground is a Reddylite used by doctors, practice nurses and other medics.

The bads news is that Iran's intention to continue its uranium enrichment programme has raised concerns that international sanctions may be imposed by the United Nations.

Sanctions, if passed, are likely to be some time away but UK businesses operating in Iran could face serious financial risks under both contracts and bank guarantees if sanctions are introduced.

Ann Benzimra, head of corporate dispute resolution at Hammonds law firm in Birmingham, explains why businesses need to act now to minimise the potential damage.

"There is no set form of sanctions and, as such it is impossible to determine exactly what restrictions might be introduced," she says.

"If, however, these are similar to those imposed on Iraq in 1990, then UK citizens and companies would effectively be prevented from performing contracts in Iran. If sanctions are introduced that prevent UK companies from fulfilling their contracts in Iran, those companies could be at risk of claims for breach of contract and could lose bank guarantees given to Iranian business partners."

The imposition of sanctions on Iran could create serious financial risks for UK companies operating in Iran, according to Ms McMain.

"If it is considered that companies are at risk under contracts, some thought should be given to the variation of those contracts or entering into side agreements," she says.

"If companies have given guarantees regarding performance under contracts to Iranian companies then sanctions could lead to the loss of those bank guarantees.

"Companies should also examine their existing insurance cover to see whether any losses incurred as a result of the imposition of sanctions could be recovered from their insurers.

"If the policy does not extend to this type of political risk then the company may wish to consider whether such cover would be appropriate."

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Copyright 2006 Technology Marketing Corporation (TMC)