Negotiable instruments are, at their cores, just a form of specialized contract with certain specific terms. As with any other form of contract, there will be those who issue negotiable instruments, but later want to cancel those instruments for any of a myriad of possible reasons.
At the very least, there will be many instances under which the maker or issuer of a negotiable instrument will want to avoid payment on that instrument, and will thus attempt to mount a defense against paying that instrument. Such defenses are dependent upon the appropriate conditions being fulfilled, however. Depending upon the exact type of defense, it may or may not successfully allow the maker to avoid payment on the negotiable instrument.
A personal defense, on the other hand, is a defense mounted on less strong grounds than a universal defense, and as a result, a personal defense will not protect the defending party from claims made by a holder in due course (HDC).
For most personal defenses, if the original recipient of the negotiable instrument negotiates the instrument to a new party that can claim HDC status, then the issuer will still be forced to pay the instrument regardless of whether or not the issuer can successfully mount a personal defense, as the HDC will be immune from any such personal defense. The issuer may still be able to obtain restitution from that first recipient in some fashion, however, through a civil law suit, but the personal defense would not affect this.
Most personal defenses are based on similar grounds to a universal defense, but are often less strongly determined. For instance, while a universal defense might be made based on the grounds that the negotiable instrument was issued with a forged signature, it could not be made based on the grounds that the recipient of the negotiable instrument was pretending to be someone else. A personal defense, however, could be made on those latter grounds under the idea that the negotiable instrument was issued based on fraudulent claims on the part of the recipient.
