Google is your friend.
With the lemon law out of the way, standard contract principles apply. If the buyer relied on your assurance that the tranny was okay, then you're liable. The buyer didn't do so (and if I recall, you told him it was starting to slip). He took it to his mechanic. The mechanic said it was fine.
I think you're going to be okay. That said, nothing prevents you from just giving his money back and taking back the car, although the administrative bs is a pain in and of itself (re-transferring title, etc.)