These contract categories can be attached to your contract templates to help categorise them. You can set these up in your system settings at any time and edit or delete them if need be.
In order to set them up, go to your system settings, scroll to the 'Contracts section' and open up 'Contracts categories'. The two defaults will be there (unremovable) as 'Service Plans' and 'Planned Preventative Maintenance'. You can create your own on the left-hand side.
Enter a name and optional description and simply hit 'Save'. If you need to make any amendments or simply remove one of your categories, use the 'Edit' and 'Delete' buttons on the right-hand side.