Hello,
Item category 'W' in a contract is not meant for automatic creation of a purchase order. It does not have a net price, where do you expect the system to pick this price from? Tax code only comes in later. Your error also talks about that.
The material group contracts can be used to keep track of orders so that they do not exceed a value limit.
In case, you do not know the material at the time of contract/ or have many similar type of materials use item category 'M' Material instead. In this you can specify price as well as tax code and use for auto POs.
Item Category/Account Assgt. Category in Contracts - Purchasing (MM-PUR) - SAP Library