The nonlinear evolution of unstable two-dimensional Eady waves is examined by means of a two-layer version of the Hoskins and Bretherton (1972) model. The upper layer is characterized by a higher static stability than the lower layer. Two types of unstable solutions are realized: the relatively long-wave solution has a vertical structure that extends throughout the vertical depth of the fluid and is the counter-part of the solution for a single layer system, while the shorter wave is essentially confined to the lower fluid layer. Model parameters, lower layer depth and static stability difference are chosen such that the two waves have comparable growth rates. The solution is determined by means of a Stokes expansion and terminated at second-order in the amplitude. The nonlinear interaction process between these growing baroclinic waves is then related to the wave interaction process described by the one-dimensional advection equation. Finally, an interpretation is proposed to explain disparate observations of cyclogenesis in polar air streams.