well link the posts http://www.youquran.com/INTRODUCTION-ISLAMIC-LAW-Schacht.PDF
For a Summary
The need of creating some kind of theoretical justification for what so far had been an instinctive reliance on the opinions of the majority, led, from the first decades of the second/eighth century onwards, to the living tradition being retrojected, and to its being ascribed to some of the great hgures of the past.
This process, too, began in Kufa, where the stage of doctrine achieved in the time of Hammad b. Abi Sulayman (d. I20/738) was attributed to Ibrahim al-Nakha'i (d. 95-6/7I3-I5). The Medinese followed suit and retrojected their own teaching to a number of ancient authorities who had died about the turn of the century, some of whom later became known as the 'seven jurists of Medina'. At the same time as the doctrine of the school of Kufa was retrospectively attributed to Ibrahim al-Nakha'i, a similar body of doctrine was directly connected with the very beginnings of Islam in Kufa by being attributed to Ibn Mas'ud, a Companion of the Prophet
who had come to live in that city, and Ibrahim al-Nakha'i became the main transmitter of that body of doctrine, too. In the same way, other Companions of the Prophet became the eponyms of the schools of Medina and of Mecca
. One further step in the search for a solid theoretical foundation of the doctrine of the ancient schools was taken in 'Iraq, very early in the second/eighth century, when the term ' Sunna of the Prophet ' was transferred from its political and theological into a legal context, and identified with the sunna, the ideal practice of the local community and the corresponding doctrine of its scholar
s. This term, which was taken over by the school of Syria, expressed the axiom that the practice of the Muslims derived from the practice of the Prophet, but it did not as yet imply the existence of positive information in the form of ' Traditions ' (Hadith), that the Prophet by his words or acts had in fact originated or approved any particular practice. It was not long before these Traditions, too, came into existence, and the persons who put them into circulation were the Traditionists.
The ancient schools of law themselves represented, in one aspect, an Islamic opposition to popular andadministrativepracticeunderthe later Umayyads, and the opposition group which developed into the Traditionist movement emphasized this tendency. As long as a Companion of the Prophet had been the final authority for the doctrine of a school on a particular point, it was sufficient for a divergent doctrine to be put under the aegis of another Companion of equal or even higher authority, as happened in Kufa where all kinds of minority opinions were attributed to the Caliph 'Ali,
who had made Kufa his capital. But after the general authority of the Prophet himself had been invoked by identifying the established doctrine with his sunna, a more specific reference to him was needed, and there appeared detailed statements or 'Traditions' which claimed to be the reports of ear- or eye-witnesses on the words or acts of the Prophet, handed down orally by an uninterrupted chain of trustworthy person
s. Very soon the emphasis shifted from proposing certain opinions in opposition to the ancient schools to disseminating Traditions from the Prophet as such, and the movement of the Traditionists, which was to develop into a separate branch of Islamic religious learning, came into being. It was the main thesis of the Traditionists that formal Traditions from the Prophet superseded the living tradition of the school. The Traditionists existed in all great centres of Islam, where they formed groups in opposition to, but nevertheless in contact with, the local schools of law. Initially the ancient schools offered strong resistance to the disturbing element represented by the Traditions, but they had no real defence against their rising tide; they had to express their own doctrines in Traditions which allegedly went back to the Prophet, and to take increasing notice of the Traditions produced by their opponents. Finally the outlines and many details of Islamic law were cast into the form of Traditions from the Prophet. In this way, one of the greatest and most successful literary fictions came into being.
Joseph Schacht - Islamic Law chapter 4.