The Common Gaol (pronounced "jail") was one of the means used to effect the authority of the North West Company in the regions under its sway. In a sketch of Fort William, Lord Selkirk wrote "Prison" on his outline of the building, but it came to be known by several names. The voyageurs called it Pot au Beurre or "Butter Pot". To Company officers, it was the Common Gaol, indicating it was the place of confinement for those below the rank of "gentleman". Other terms were the Black Hole or the dungeon.

From accounts by persons incarcerated in the Gaol, it was not a very pleasant place.  Blacksmith Alexander Fraser's reaction to his prison experience was typical:

"(It was) a small square building made of hewn logs, without any light, wherein was a quantity of human excrement.  That, after being a short time in this confinement, the stench of the place, and the bruises he had received, made this deponent conceive that if he were kept there much longer his health would be destroyed."

By the Canada Jurisdiction Act of 1803, magistrates  (police officers with powers to act as government agents) were appointed by the Governor of Lower Canada to enforce law and order in the Indian Territories (the British-held lands beyond the legal limits of the Canadas and not under the jurisdiction of the Hudson's Bay Company).

Since magistrates appointed under the Act were usually North West Company agents, it can be seen that the law and the gaol at Fort William were used primarily in the interests of the Company.  Prisoners at Fort William included voyageurs and Hudson's Bay Company servants or allies.  In 1816, use of the Gaol was reversed when Lord Selkirk, himself appointed as a magistrate under the Act, used it to imprison North West Company partner Daniel McKenzie.