Am I responsible if items I sold were damaged in transit and the buyer was responsible to pay for shipping.?

I sold a fairly expensive phone system that had to be shipped from myself in California all the way to Machusetts. Part of our agreement was that the buyer would pay shipping because of the large cost to ship. We completed a bill of sale and the buyer mailed me the payment and pre-paid shipping labels. I had the items packaged in what I thought was a very safe manner. The buyer contacted me after receiving the items and said part of the system was damaged and did not work (They def. worked when shipped). The buyer now wants to send back the items that do not work and get a partial refund. I feel I packaged the items as safe as possible and the buyer should be liable since they were responsible for the shipping costs and did not pay for insurance. What is the legality behind this type of private party transaction.