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XYZ affair was a political affair in 1797 and 1798 involving United States and France.

It was a situation in which war could have been declared. It started with financial problems of the French government and their decision to seize American merchant ships. A diplomatic mission was working towards a de-escalation of the conflict, but the French side demanded bribes, which the US didn't want to grant.

The conflict finally was settled in a diplomatic way and a war was avoided.

In the years of 1797 and 1798, the United States got into a diplomatic incident that was between France. The XYZ affair led to the undeclared Quasi-War. The attempt was to avert war with Great Britain. The XYZ affair started because France allowed an order for the seizure of American merchant ships in the year 1796. The XYZ affair was a very unsuccessful diplomatic incident and this contributes to the hostilities between both the United States of America and France.