The club captain, who had a deal with the Blues to 2028, has put pen to paper on a new contract to 2032, reports the Athletic.
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However, the deal does involve a restructuring of his financial terms to bring the fullback in line with the rest of the squad. Since the club's new owners took over from predecessor Roman Abramovich, the focus has been on incentivised contracts.
Chelsea have moved to secure James to a new arrangement with the defender now having played more games this season than he has for the previous three campaigns.
With James proving his fitness, management moved to extend his contract, with a deal now reportedly inked.