AbstractOwing to imperfect boundary conditions in laboratory soil tests and the possibility of water diffusion inside the soil specimen in undrained tests, the assumption of uniform stress/strain over the sample is not valid. This study presents a qualitative assessment of the effects of non‐uniformities in stresses and strains, as well as effects of water diffusion within the soil sample on the global results of undrained cyclic simple shear tests. The possible implications of those phenomena on the results of liquefaction strength assessment are also discussed. A state‐of‐the‐art finite element code for transient analysis of multi‐phase systems is used to compare results of the so‐called ‘element tests’ (numerical constitutive experiments assuming uniform stress/strain/pore pressure distribution throughout the sample) with results of actual simulations of undrained cyclic simple shear tests using a finite element mesh and realistic boundary conditions. The finite element simulations are performed under various conditions, covering the entire range of practical situations: (1) perfectly drained soil specimen with constant volume, (2) perfectly undrained specimen, and (3) undrained test with possibility of water diffusion within the sample. The results presented here are restricted to strain‐driven tests performed for a loose uniform fine sand with relative density Dr=40%. Effects of system compliance in undrained laboratory simple shear tests are not investigated here. Copyright © 2004 John Wiley & Sons, Ltd.