Under certain loading conditions, instability in loose sand can develop at a shear stress level much lower than the critical state failure line. To analyse these types of problems, we adopt the micromechanical approach developed earlier for the modelling of granular material behaviour. The stress-strain relationship for a granular assembly is determined by integrating the behaviour of the inter-particle contacts in all orientations. The constitutive model is applied to simulate undrained triaxial and constant-q tests on loose sand. Numerical simulations are compared to experimental results in order to evaluate the model's ability to predict the different modes of instability of the granular assembly. With the model we have also analysed instability at inter-particle level to observe how it is connected to instability at the assembly level.